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Article by DailyStocks_admin    (08-22-08 03:21 AM)

Filed with the SEC from Aug 11 to Aug 15:

Biogen Idec (BIIB)
Investment funds controlled by investor Carl Icahn raised their stake to 17.5 million shares (6.03%) from the 12.4 million (4.24%) reported on March 31. Icahn, who lost a proxy fight with Biogen, says that he may seek to continue discussions with the company.

BUSINESS OVERVIEW

Overview

Biogen Idec creates new standards of care in therapeutic areas with high unmet medical needs. Biogen Idec is a global leader in the development, manufacturing, and commercialization of innovative therapies. Patients in more than 90 countries benefit from Biogen Idec’s significant products that address diseases such as multiple sclerosis, lymphoma and rheumatoid arthritis. We currently have four products:

AVONEX ® (interferon beta-1a)

AVONEX is approved worldwide for the treatment of relapsing forms of multiple sclerosis, or MS, and is the most prescribed therapeutic product in MS worldwide. Globally over 135,000 patients use AVONEX.

RITUXAN ® (rituximab)

RITUXAN is approved worldwide for the treatment of relapsed or refractory low-grade or follicular, CD20-positive, B-cell non-Hodgkin’s lymphomas, or B-cell NHLs. The U.S. Food and Drug Administration, or FDA, has also approved RITUXAN for (1) the treatment of patients with previously untreated diffuse, large B-cell NHL in combination with anthracycline-based chemotherapy regimens, (2) treatment of patients with previously-untreated follicular NHL in combination with CVP (cyclophosphamide, vincristine and prednisone) chemotherapy, and (3) the treatment of patients with non-progressing (including stable disease) low grade B-cell NHL following first-line treatment with CVP chemotherapy. We believe that RITUXAN is the second highest-selling oncology therapeutic in the United States and has had more than 1,000,000 patient exposures worldwide across all indications. In addition, RITUXAN, in combination with methotrexate, is also approved for reducing signs and symptoms and to slow the progression of structural damage in adult patients with moderately-to-severely active rheumatoid arthritis, or RA, who have had an inadequate response to one or more tumor necrosis factor, or TNF, antagonist therapies. We are working with Genentech and Roche on the development of RITUXAN in additional oncology, neurology and immunology indications.

RITUXAN is the trade name for the compound rituximab in the U.S., Canada and Japan. MabThera is the trade name for rituximab in the European Union, or EU. In this Annual Report, we refer to rituximab, RITUXAN, and MabThera collectively as RITUXAN, except where we have otherwise indicated.

TYSABRI ® (natalizumab)

TYSABRI is approved for the treatment of relapsing forms of MS in the U.S. and other countries, and in the U.S. for inducing and maintaining clinical response and remission in adult patients with moderately to severely active Crohn’s disease, or CD, with evidence of inflammation who have had an inadequate response to, or are unable to tolerate, conventional CD therapies and inhibitors of TNF-alpha. Under the terms of a collaboration agreement with Elan Corporation plc, or Elan, we are solely responsible for the manufacture of TYSABRI, and we collaborate with Elan on the product’s marketing, commercial distribution and on-going development activities. The collaboration agreement with Elan is designed to effect an equal sharing of profits and losses generated by the activities of the collaboration between Elan and us.

FUMADERM ® (dimethylfumarate and monoethylfumarate salts)

FUMADERM was acquired with the purchase of Fumapharm AG, or Fumapharm, in June 2006. In December 2006, we acquired the right to distribute FUMADERM in Germany from Fumedica effective May 1, 2007. FUMADERM acts as an immunomodulator and has been approved in Germany for the treatment of severe psoriasis since 1994.

Other Revenue and Programs

In 2007, we recorded product revenues from sales of ZEVALIN ® (ibritumomab tiuxetan) prior to our sale of U.S. rights to this product line in December 2007.

We also receive royalty revenues on sales by our licensees of a number of products covered under patents that we control. In addition, we have a pipeline of research and development products in our core therapeutic areas and in other areas of interest.

We devote significant resources to research and development programs and external business and corporate development efforts. We intend to focus our research and development efforts on finding novel therapeutics in areas of high unmet medical need, both within our current focus areas of oncology, neurology, immunology and cardiology as well as in new therapeutic areas. Our current late stage efforts include our work with Genentech and Roche on the development of RITUXAN in additional oncology indications, RA, MS and lupus and the co-development of additional anti-CD20 antibody products including the humanized anti-CD20 antibody (ocrelizumab), which is in Phase 3 studies in rheumatoid arthritis and systemic lupus erythematosus; BG-12 for relapsing forms of MS in Phase 3; galiximab for NHL in Phase 3; and lumiliximab for chronic lymphocytic leukemia, or CLL, in Phase 2/3; and lixivaptan for acute hyponatremia, currently initiating Phase 3 clinical studies.

Available Information

We are a Delaware corporation with principal executive offices located at 14 Cambridge Center, Cambridge, Massachusetts 02142. Our telephone number is (617) 679-2000 and our website address is www.biogenidec.com. We make available free of charge through the Investor Relations section of our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission, or the SEC. We include our website address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website. You may read and copy materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may get information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

AVONEX

We currently market and sell AVONEX worldwide for the treatment of relapsing forms of MS. In 2007, sales of AVONEX generated worldwide revenues of $1,867.8 million as compared to worldwide revenues of $1,706.7 million in 2006.

MS is a progressive neurological disease in which the body loses the ability to transmit messages along nerve cells, leading to a loss of muscle control, paralysis and, in some cases, death. Patients with active relapsing MS experience an uneven pattern of disease progression characterized by periods of stability that are interrupted by flare-ups of the disease after which the patient returns to a new baseline of functioning. AVONEX is a recombinant form of a protein produced in the body by fibroblast cells in response to viral infection. AVONEX has been shown in clinical trials in relapsing forms of MS both to slow the accumulation of disability and to reduce the frequency of flare-ups. AVONEX is approved to treat relapsing forms of MS, including patients with a first clinical episode and MRI features consistent with MS. We began selling AVONEX in the U.S. in 1996, and in the EU in 1997. AVONEX is on the market in over 70 countries. Based on data from an independent third party research organization, information from our distributors and internal analysis, we believe that AVONEX is the most prescribed therapeutic product for the treatment of MS worldwide. Globally over 135,000 patients use AVONEX.

We continue to work to expand the data available about AVONEX and MS treatments. In October 2007, we presented at the Congress of the European Committee for Treatment and Research of Multiple Sclerosis, or ECTRIMS, in Prague, Czech Republic, on the final results from a worldwide comparative study (QUASIMS) of the efficacy and tolerability of interferon-beta products for the treatment of relapsing multiple sclerosis. This retrospective, observational study presented at ECTRIMS involved 7,542 MS patients. This geographically diverse group from a range of clinical practice settings is the largest cohort of patients with relapsing remitting MS, or RRMS, that has been studied to evaluate and compare patient outcomes with interferon beta. The effects of all currently available interferon beta treatments were similar over 2 years in patients with RRMS. Even in patients with higher baseline annualized relapse rates or expanded disability status scale scores, there was no clear benefit of one interferon over another. This is in contrast to two earlier studies suggesting there were differences in efficacy between certain interferon beta formulations and dosing regimens (the Independent Comparison of Interferon (INCOMIN) and Evidence of Interferon Dose-Response and European — North American Comparative Efficacy (EVIDENCE) trials). Of the treatments studied, however, AVONEX requires the least frequent administration.

We have also extended the Controlled High Risk AVONEX Multiple Sclerosis Prevention Study In Ongoing Neurological Surveillance, or CHAMPIONS. CHAMPIONS was originally designed to determine whether the effect of early treatment with AVONEX in delaying relapses and reducing the accumulation of MS brain lesions could be sustained for up to five years. The study results showed that AVONEX altered the long-term course of MS in patients who began treatment immediately after their initial MS attack compared to initiation of treatment more than two years after onset of symptoms. The five-year study extension is intended to determine if the effects of early treatment with AVONEX can be sustained for up to ten years. We also continue to support Phase 4 investigator-run studies evaluating AVONEX in combination with other therapies.

RITUXAN

RITUXAN is approved worldwide for the treatment of relapsed or refractory low-grade or follicular, CD20-positive, B-cell NHLs, which comprise approximately half of the B-cell NHLs diagnosed in the U.S. In the U.S., RITUXAN is approved for NHL with the following label indications:


• The treatment of patients with relapsed or refractory, low-grade or follicular, CD20-positive, B-cell NHL as a single agent;

• The treatment of patients with previously untreated diffuse large B-cell, CD20-positive, NHL, or DLBCL, in combination with CHOP (cyclophosphamide, doxorubicin, vincristine and prednisone) or other anthracycline-based chemotherapy regimens;

• The treatment of patients with previously untreated follicular, CD20-positive, B-cell NHL in combination with CVP (cyclophosphamide, vincristine and prednisone) chemotherapy; and

• The treatment of patients with non-progressing (including stable disease), low grade CD20-positive, B-cell NHL, as a single agent, after first line CVP chemotherapy.

In addition, RITUXAN, in combination with methotrexate, is also approved for reducing signs and symptoms and to slow the progression of structural damage in adult patients with moderately-to-severely active rheumatoid arthritis, or RA, who have had an inadequate response to one or more TNF antagonist therapies.

Our interest in RITUXAN is recognized as revenue from unconsolidated joint business, and is made up of three components:


• We copromote RITUXAN in the U.S. in collaboration with Genentech. All U.S. sales of RITUXAN are recognized by Genentech, and we record our share of the pretax copromotion profits on a quarterly basis. In 2007, RITUXAN generated U.S. net sales of $2.3 billion, of which we recorded $616.8 million as our share of copromotion profits, as compared to U.S. net sales of $2.1 billion in 2006, of which we recorded $555.8 million as our share of copromotion profits;

• Roche sells RITUXAN outside the U.S., except in Japan where it co-markets RITUXAN in collaboration with Zenyaku Kogyo Co. Ltd., or Zenyaku. We received royalties through Genentech on sales of RITUXAN outside of the U.S. of $250.8 million in 2007 as compared to $194.0 million in 2006; and

• Finally, we receive reimbursement from Genentech for our selling and development expenses.

In the U.S., we share responsibility with Genentech for continued development. Such continued development includes conducting supportive research and post-approval clinical studies and seeking potential approval for additional indications. Genentech provides the support functions for the commercialization of RITUXAN in the U.S. and has worldwide manufacturing responsibilities. See “Sales, Marketing and Distribution — RITUXAN” and “Manufacturing and Raw Materials.” We also have the right to collaborate with Genentech on the development of other humanized anti-CD20 antibodies targeting B-cell disorders for a broad range of indications, and to copromote with Genentech any new products resulting from such development in the U.S. The most advanced such humanized anti-CD20 antibody under development, ocrelizumab, is in Phase 3 trials in rheumatoid arthritis and systemic lupus erythematosus. We are currently in arbitration with Genentech as to whether Genentech has the right to develop collaboration products, including the second-generation humanized anti-CD20 molecule, without our approval. See “Item 3 — Legal Proceedings” for a description of that arbitration. Our agreement with Genentech provides that the successful development and commercialization of new anti-CD20 product candidates in our collaboration (which also includes RITUXAN) will decrease our participation in the operating profits from the collaboration (including as to RITUXAN). See Consolidated Financial Statements Note 16, Unconsolidated Joint Business Arrangement.

RITUXAN in Oncology

We believe that RITUXAN is the second-highest-selling oncology therapeutic in the United States and has had more than 1,000,000 patient exposures worldwide across all indications. RITUXAN is generally administered as outpatient therapy by personnel trained in administering chemotherapies or biologics. RITUXAN is unique in the treatment of B-cell NHLs due to its specificity for the antigen CD20, which is expressed only on the surface of normal B-cells and malignant B-cells. Stem cells (including B-cell progenitors or precursor B-cells) in bone marrow lack the CD20 antigen. This allows healthy B-cells to regenerate after treatment with RITUXAN and to return to normal levels within several months. RITUXAN’s mechanism of action, in part, utilizes the body’s own immune system as compared to conventional lymphoma therapies.

In an effort to identify additional applications for RITUXAN, we, in conjunction with Genentech and Roche, continue to support RITUXAN post-marketing studies. We, along with Genentech and Roche, are conducting a multi-center global Phase 3 registrational study known as REACH in patients with relapsed chronic lymphocytic leukemia, or CLL, comparing the use of fludarabine, cyclophosphamide and RITUXAN together, known as FCR, versus fludarabine and cyclophosphamide alone. Enrollment for this study was completed in the third quarter of 2007. We, along with Genentech and Roche, are also conducting a trial known as PRIMA that is evaluating the added efficacy of RITUXAN maintenance therapy after previously untreated follicular non-Hodgkin’s lymphoma patients are given a combination of chemotherapy and RITUXAN. To date, the added benefit of RITUXAN has only been evaluated in relapsed patients. PRIMA completed enrollment in 2007. Additional clinical studies are ongoing in other B-cell malignancies such as lymphoproliferative disorders associated with solid organ transplant therapies, relapsed aggressive non-Hodgkin’s lymphoma and mantle cell non-Hodgkin’s lymphoma.

RITUXAN in RA

RITUXAN, in combination with methotrexate, is approved for reducing signs and symptoms and to slow the progression of structural damage in adult patients with moderately-to-severely active rheumatoid arthritis who have had an inadequate response to one or more TNF antagonist therapies. We, along with Genentech and Roche, initiated a Phase 3 clinical study of RITUXAN in RA patients who are inadequate responders to disease-modifying anti-rheumatic drugs, or DMARDs, in 2006. In January 2008 we announced that the study, known as SERENE, met its primary endpoint of a significantly greater proportion of RITUXAN-treated patients achieving an American College of Rheumatology (ACR) 20 response (the proportion of patients who achieve at least 20% improvement) at week 24, compared to placebo. In this study patients who received either 500 mg or 1000 mg of RITUXAN as a single treatment course of two infusions in combination with a stable dose of methotrexate displayed a statistically significant improvement in symptoms compared to patients who received placebo in combination with methotrexate. Although the study was not designed to compare the RITUXAN doses, the efficacy of the two doses appeared to be similiar. Further analyses of the data are ongoing and will be submitted for presentation at an upcoming medical meeting. In 2007 we received positive results from the Phase 3 study known as SUNRISE, investigating the controlled re-treatment of patients who are inadequate responders to TNF therapies. Patients who were not in remission at 24 weeks following administration of a course of RITUXAN were randomized to receive either a second course of RITUXAN or placebo. The primary endpoint, the proportion of retreated patients with an ACR 20 response at Week 48 relative to baseline, was achieved with significantly more patients achieving an ACR 20 with RITUXAN retreatment compared to placebo. Genentech and Biogen Idec will continue to analyze the study results and we anticipate presenting the results at an upcoming meeting in 2008.

RITUXAN in Other Immunology Indications

Based primarily on results from the studies of RITUXAN in RA, as well as other small investigator-sponsored studies in various autoimmune-mediated diseases, we, along with Genentech, are conducting a Phase 3 clinical study of RITUXAN in primary progressive MS, or PPMS, and a registrational program in systemic lupus erythematosus, or SLE, comprised of a Phase 3 study in lupus nephritis and a Phase 2/3 study in a general SLE population. We anticipate reporting results from the PPMS and SLE studies in the first half of 2008. Enrollment in the Lupus Nephritis study is still ongoing. In August 2006, we and Genentech announced that a Phase 2 study of RITUXAN in relapsing-remitting MS met its primary endpoint. Results were presented at the American Academy of Neurology annual meeting in May 2007. The study of 104 patients showed a statistically significant reduction in the total number of gadolinium enhancing T1 lesions observed on serial MRI scans of the brain at weeks 12, 16, 20 and 24 in the RITUXAN-treated group compared to placebo. At week 24, the total cumulative mean number of gadolinium lesions per patient was reduced by 91%, to 0.5 in the RITUXAN-treated group from 5.5 in the placebo group (p0.001). In addition, the proportion of patients with relapses over 24 weeks in the RITUXAN-treated arm was 14.5% compared to 34.3% in the placebo arm (58% relative reduction) (p=0.02). The result of statistical testing is often defined in terms of a “p-value,” with a level of 0.05 or less considered to be a statistically significant difference, which means the result is unlikely due to chance.

In December 2006, we and Genentech issued a dear healthcare provider letter informing healthcare providers that two cases of progressive multifocal leukoencephalopathy, or PML, a rare and frequently fatal demyelinating disease of the central nervous system, resulting in death were reported in patients receiving RITUXAN for treatment of SLE, an indication where RITUXAN is not approved for treatment. The prescribing information for RITUXAN has been updated to reflect these reports.

TYSABRI

TYSABRI is approved for the treatment of relapsing forms of MS. On June 5, 2006, we and Elan announced the FDA’s approval of the supplemental Biologics License Application, or sBLA, for the reintroduction of TYSABRI as a monotherapy treatment for relapsing forms of MS to slow the progression of disability and reduce the frequency of clinical relapses. On June 29, 2006, we and Elan announced that the European Medicines Agency, or EMEA, had approved TYSABRI as a similar treatment. TYSABRI is also approved for MS in Switzerland, Canada, Australia, New Zealand and Israel.

TYSABRI was initially approved by the FDA in November 2004 to treat relapsing forms of MS to reduce the frequency of clinical relapses. In February 2005, in consultation with the FDA, we and Elan voluntarily suspended the marketing and commercial distribution of TYSABRI based on reports of cases of PML in patients treated with TYSABRI in clinical studies. In consideration of these events, TYSABRI is marketed under risk management or minimization plans as agreed with local regulatory authorities. In the U.S., TYSABRI was reintroduced with a risk minimization action plan, or RiskMAP, known as the TYSABRI Outreach: Unified Commitment to Health, or TOUCH, Prescribing Program, a rigorous system intended to educate physicians and patients about the risks involved and assure appropriate use of the product.

As of late December 2007, more than 21,000 patients were on commercial and clinical TYSABRI therapy worldwide. As of mid-December 2007, up to 30,900 patients had been treated with TYSABRI cumulatively in the combined clinical trial and post-marketing settings. There have been no new cases of PML since relaunch in the U.S. and launch internationally in July 2006.

On January 14, 2008, we and Elan announced the FDA’s approval of the sBLA for use of TYSABRI for inducing and maintaining clinical response and remission in adult patients with moderately to severely active Crohn’s disease, or CD, with evidence of inflammation who have had an inadequate response to, or are unable to tolerate, conventional CD therapies and inhibitors of TNF-alpha. TYSABRI will be available for the treatment of CD upon the completion of key implementation activities related to the approved risk management plan. We anticipate TYSABRI will be available to Crohn’s patients by the end of the first quarter of 2008.

The FDA granted approval based on its review of overall safety data and the results of three randomized, double-blind, placebo-controlled, multi-center trials of TYSABRI assessing the safety and efficacy as both an induction and maintenance therapy — ENCORE (Efficacy of Natalizumab in Crohn’s Disease Response and Remission), ENACT-1 (Efficacy of Natalizumab as Active Crohn’s Therapy) and ENACT-2 (Evaluation of Natalizumab As Continuous Therapy). The approval contains labeling and a risk management plan, both of which are similar to those approved for the MS indication. One of the confirmed cases of PML was in a patient who was in a clinical study of TYSABRI in Crohn’s disease.

In September 2004, Elan submitted a Marketing Authorisation Application, or MAA, to the EMEA for approval of TYSABRI as a treatment for Crohn’s disease. A committee of the EMEA adopted a negative recommendation in November 2007. The European Commission affirmed the committee’s decision in the first quarter of 2008, which means that Crohn’s disease will not be included in our label for TYSABRI in the EU.

TYSABRI binds to adhesion molecules on the immune cell surface known as alpha-4 integrin. Adhesion molecules on the surface of the immune cells play an important role in the migration of the immune cells in the inflammatory process. Research suggests that by binding to alpha-4 integrin, TYSABRI prevents immune cells from migrating from the bloodstream into tissue where they can cause inflammation and potentially damage nerve fibers and their insulation.

Under the terms of the collaboration, we are solely responsible for the manufacture of TYSABRI, and we collaborate with Elan on the product’s marketing, commercial distribution and ongoing development activities. The collaboration agreement with Elan is designed to effect an equal sharing of profits and losses generated by the activities of the collaboration between Elan and us. Under our agreement with Elan, however, in the event that sales of TYSABRI exceed specified thresholds, Elan is required to make milestone payments to us in order to continue sharing equally in the collaboration’s results.

In the U.S., we sell TYSABRI to Elan who sells the product to third party distributors. Elan and we co-market the product. The sales price to Elan in the U.S. is set at the beginning of each quarterly period to effect an approximate equal sharing of the gross margin between Elan and us. In addition, both parties share equally in the operating costs, which include research and development, selling, general and administrative expenses and other similar costs. Sales of TYSABRI to Elan are reported as revenues and are recognized upon Elan’s shipment of the product to third party distributors, at which time all revenue recognition criteria have been met. As of December 31, 2007 and 2006, we had deferred revenue of $9.0 and $5.0 million, respectively, for shipments to Elan that remained in Elan’s ending inventory. Elan’s reimbursement of TYSABRI operating costs is reflected as a reduction of the respective costs within our consolidated statement of income.

For sales outside of the U.S., we are responsible for distributing TYSABRI to customers and are primarily responsible for all operating activities. We and Elan share equally in the operating results of TYSABRI outside the U.S. Sales of TYSABRI are reported as revenue and are recognized at the time of product delivery to our customer, at which time all revenue recognition criteria have been met. Payments to or from Elan for their share of the collaboration operating losses relating to sales outside the U.S. are reflected in the collaboration profit (loss) sharing line in our consolidated statement of income. For 2007 and 2006, we provided and received net payments of $14.1 million and ($9.7) million, respectively, related to reimbursements made in connection with this arrangement.

In July 2006, we began to ship TYSABRI in both the United States and Europe. In 2007, we recorded sales of TYSABRI in the U.S. and Europe of $104.4 million and $125.5 million, respectively. In 2006, we recorded sales of TYSABRI in the U.S. and Europe relating to current activity of $11.9 million and $10.0 million, respectively. Prior to the suspension of TYSABRI in 2005, we shipped product to Elan in the U.S. and recognized revenue in accordance with the policy described above. As a result of the suspension of TYSABRI, we deferred $14.0 million in revenue from Elan as of March 31, 2005 related to TYSABRI product that remained in Elan’s ending inventory. This amount was paid by Elan during 2005 and was subsequently recognized as revenue during 2006, when the uncertainty about the ultimate disposition of the product was eliminated.

PHASE 3 Studies of TYSABRI in MS

Prior to the suspension of dosing in clinical studies of TYSABRI we, along with Elan, completed the AFFIRM study and the SENTINEL study. The AFFIRM study was designed to evaluate the ability of natalizumab to slow the progression of disability in MS and reduce the rate of clinical relapses. The SENTINEL study was designed to evaluate the effect of the combination of natalizumab and AVONEX compared to treatment with AVONEX alone in slowing progression of disability and reducing the rate of clinical relapses. Both studies were two-year studies which had protocols that included a one-year analysis of the data.

The AFFIRM study

The one-year data from the AFFIRM study showed that TYSABRI reduced the rate of clinical relapses by 66% relative to placebo, the primary endpoint at one year. AFFIRM also met all one-year secondary endpoints, including MRI measures. In the TYSABRI treated group, 60% of patients developed no new or newly enlarging T2 hyperintense lesions compared to 22% of placebo treated patients. On the one-year MRI scan, 96% of TYSABRI treated patients had no gadolinium-enhancing lesions compared to 68% of placebo treated patients. The proportion of patients who remained relapse free was 76% in the TYSABRI treated group compared to 53% in the placebo treated group. In February 2005, we and Elan announced that the AFFIRM study also achieved the two-year primary endpoint of slowing the progression of disability in patients with relapsing forms of MS. In the TYSABRI treated group, there was a 42% reduction in the risk of disability progression relative to placebo, and a 67% reduction in the rate of clinical relapses over two years relative to placebo which was sustained and consistent with the one-year results. Other efficacy data, including MRI measures, were similar to the one-year results.

In May 2007 at the annual meeting of the American Academy of Neurology in Boston, we presented extension study data that showed that TYSABRI has a sustained treatment effect on clinical relapses and the risk of disability progression in MS patients treated for up to three years. Patients who participated in the Phase 3 TYSABRI program (including the AFFIRM trial) were eligible to enroll in an open-label extension study that evaluated the therapy’s long-term effects. In the intent-to-treat analysis, the annualized relapse rate for patients treated with TYSABRI over the three-year period was 0.23, translating into an average of one relapse every 4.3 years. The relapse rate also continued to remain low over the three-year treatment period with TYSABRI: 0.27 during the first year; 0.20 during the second year; and 0.15 during the third year (based on 531 patients who entered the extension study, which includes approximately 250 patients with nearly three years of continuous therapy). In addition, TYSABRI also decreased the cumulative probability of disability progression sustained for six months compared to placebo. The estimated proportion of patients who had 24-week sustained disability progression at two years was 11% in patients treated with TYSABRI compared to 23% in patients treated with placebo, a 54% relative reduction. This effect was maintained in patients treated with TYSABRI for up to three years with 13% showing 24-week sustained disability progression.

In October 2007 at the 23rd Congress of ECTRIMS in Prague, Czech Republic, we presented a poster on a post hoc analysis of the Phase 3 AFFIRM study. The study data suggest the proportion of disease-free patients over two years was significantly higher in the TYSABRI-treated group compared with the placebo group, as determined based upon both clinical and MRI criteria. Using clinical and MRI disease-free criteria combined, the most stringent definition of disease free, 36.7% of TYSABRI-treated patients had no relapses, disability progression or MRI activity compared with 7.2% of placebo patients (p0.0001). In the clinical analysis, 64.3% of TYSABRI-treated patients vs. 38.9% placebo-treated patients (p0.0001) were disease free or without relapses and disability progression. Using MRI measures, 57.7% of TYSABRI-treated patients vs. 14.2% placebo-treated patients (p0.0001) were disease free, or without gadolinium-enhancing lesions and new or enlarging T2-hyperintense lesions.

The SENTINEL study

The one-year data from the SENTINEL combination study also showed that the study achieved its one-year primary endpoint. The addition of TYSABRI to AVONEX resulted in a 54% reduction in the rate of clinical relapses over the effect of AVONEX alone. SENTINEL also met all secondary endpoints, including MRI measures. In the group treated with TYSABRI plus AVONEX, 67% of the patients developed no new or newly enlarging T2 hyperintense lesions compared to 40% in the AVONEX plus placebo group. On the one-year MRI scan, 96% of TYSABRI plus AVONEX-treated patients had no gadolinium-enhancing lesions compared to 76% of AVONEX plus placebo treated patients. The proportion of patients who remained relapse free was 67% in the TYSABRI plus AVONEX-treated group compared to 46% in the AVONEX plus placebo-treated group. In the TYSABRI-treated group, 60% of patients developed no new or newly enlarging T2 hyperintense lesions compared to 22% of placebo treated patients. On the one-year MRI scan, 96% of TYSABRI treated patients had no gadolinium-enhancing lesions compared to 68% of placebo treated patients. In July 2005, we and Elan announced that the SENTINEL study also achieved the two-year primary endpoint of slowing the progression of disability in patients with relapsing forms of MS. The addition of TYSABRI to AVONEX resulted in a 24% reduction in the risk of disability progression compared to the effect of AVONEX alone, and a 56% reduction in the rate of clinical relapses over two years compared to that provided by AVONEX alone. Other efficacy data, including MRI measures, were similar to the one-year results.

Phase 3 Studies of TYSABRI in Crohn’s Disease

We, along with Elan, have completed three Phase 3 studies of TYSABRI in Crohn’s disease, a chronic and progressive inflammatory disease of the gastrointestinal tract, which commonly affects both men and women. The three completed Phase 3 studies are known as ENACT-2 (Evaluation of Natalizumab as Continuous Therapy-2), ENACT-1 (Evaluation of Natalizumab as Continuous Therapy-1), and ENCORE (Efficacy of Natalizumab for Crohn’s Disease Response and Remission).

ENACT-1/ENACT-2

In ENACT-2, 339 patients who were responders in ENACT-1, the Phase 3 induction study, were re-randomized to one of two treatment groups, TYSABRI or placebo, both administered monthly for a total of 12 months. In ENACT-1, the primary endpoint of “response,” as defined by a 70-point decrease in the Crohn’s Disease Activity Index, or CDAI, at week 10, was not met. In ENACT-2, the primary endpoint, which was met, was maintenance of response through six additional months of therapy. A loss of response was defined as a greater than 70 point increase in CDAI score and a total CDAI score above 220 or any rescue intervention. Through month six, there was a significant treatment difference of greater than 30% in favor of patients taking TYSABRI compared to those taking placebo. Twelve-month data from ENACT-2 showed a sustained and clinically significant response throughout 12 months of extended TYSABRI infusion therapy, confirming findings in patients who had previously shown a sustained response throughout six months. Maintenance of response was defined by a CDAI score of less than 220, and less than 70-point increase from baseline, in the absence of rescue intervention throughout the study. Response was maintained by 54% of patients treated with natalizumab compared to 20% of those treated with placebo (p0.001). In addition, 39% of patients on TYSABRI maintained clinical remission during the study period, versus 15% of those on placebo (p0.001). By the end of month six, 58% of patients treated with TYSABRI who had previously been treated with corticosteroids were able to withdraw from steroid therapy compared to 28% of placebo-treated patients.

The ENCORE study

In June 2005, we and Elan announced that ENCORE, the second Phase 3 induction trial of TYSABRI for the treatment of moderately to severely active Crohn’s disease in patients with evidence of active inflammation, met the primary endpoint of clinical response as defined by a 70-point decrease in baseline CDAI score at both weeks 8 and 12. The study also met all of its secondary endpoints, including clinical remission at both weeks 8 and 12. Clinical remission was defined as achieving a CDAI score of equal to or less than 150 at weeks 8 and 12. At the time of the TYSABRI suspension, all ENCORE study patients had completed dosing based on the study protocol and collection of data and analysis followed.

CEO BACKGROUND

James C. Mullen is our Chief Executive Officer and President and is a director, and has served in these positions since the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation, or the merger, in November 2003. Mr. Mullen was formerly Chairman of the Board and Chief Executive Officer of Biogen, Inc. He was named Chairman of the Board of Directors of Biogen, Inc. in July 2002, after being named President and Chief Executive Officer of Biogen, Inc. in June 2000. Mr. Mullen joined Biogen, Inc. in 1989 as Director, Facilities and Engineering. He was named Biogen, Inc.’s Vice President, Operations, in 1992. From 1996 to 1999, Mr. Mullen served as Vice President, International, with responsibility for building all Biogen, Inc. operations outside North America. From 1984 to 1988, Mr. Mullen held various positions at SmithKline Beckman Corporation (now GlaxoSmithKline plc). Mr. Mullen is a member of the board of directors and executive committee of the Biotechnology Industry Organization, or BIO, and is a former chairman of the board of BIO. Mr. Mullen is also a director of PerkinElmer, Inc.

Cecil B. Pickett Ph.D. is our President, Research and Development and has served in that position since September 2006 and has served as one of our directors since September 2006. Prior to joining Biogen Idec, he was President, Schering-Plough Research Institute from March 2002 to September 2006, and before that he was Executive VP of Discovery Research at Schering-Plough Corporation from September 1993 to March 2002. Mr. Pickett is a member of the Institute of Medicine of the National Academy of Sciences.

Paul J. Clancy is our Executive Vice President, Finance and Chief Financial Officer and has served in that position since August 2007. Mr. Clancy joined Biogen Idec in 2001, and has held several senior executive positions, including Vice President of Business Planning, Portfolio Management and U.S. Marketing, and Senior Vice President of Finance with responsibilities for leading the Treasury, Tax, Investor Relations and Business Planning groups. Prior to joining Biogen Idec, he spent 13 years at PepsiCo, serving in a range of financial and general management positions.

Susan H. Alexander is our Executive Vice President, General Counsel and Corporate Secretary and has served in these positions since January 2006. Prior to that, Ms. Alexander served as the Senior Vice President, General Counsel and Corporate Secretary of PAREXEL International Corporation, since September 2003. From June 2001 to September 2003, Ms. Alexander served as General Counsel of IONA Technologies. Prior to that, Ms. Alexander served as Counsel at Cabot Corporation from January 1995 to May 2001. Prior to that, Ms. Alexander was a partner of the law firms of Hinckley, Allen & Snyder and Fine & Ambrogne.

John M. Dunn is our Executive Vice President, New Ventures and has served in that position since the merger in November 2003. Mr. Dunn was our Senior Vice President, Legal and Compliance, and General Counsel from January 2002 to November 2003. Prior to that, he was a partner at the law firm of Pillsbury Winthrop LLP specializing in corporate and business representation of public and private companies.

Robert A. Hamm is our Executive Vice President, Pharmaceutical Operations & Technology, and has served in that position since October 2007. Previously, Mr. Hamm served as Senior Vice President, Neurology Strategic Business Unit from January 2006 to October 2007; Senior Vice President, Immunology Business Unit from the merger in November 2003 until January 2006; and in the same capacity with Biogen, Inc. from November 2002 to November 2003. Before that, he served as Senior Vice President — Europe, Africa, Canada and Middle East from October 2001 to November 2002. Prior to that, Mr. Hamm served as Vice President — Sales and Marketing of Biogen, Inc. from October 2000 to October 2001. Mr. Hamm previously served as Vice President — Manufacturing from June 1999 to October 2000, Director, Northern Europe and Distributors from November 1996 until June 1999 and Associate Director, Logistics from April 1994 until November 1996. From 1987 until April 1994, Mr. Hamm held a variety of management positions at Syntex Laboratories Corporation, including Director of Operations and New Product Planning, and Manager of Materials, Logistics and Contract Manufacturing. Mr. Hamm is a director of Inhibitex, Inc.

Hans Peter Hasler has served as our Executive Vice President, Global Neurology, Head of International since October 2007 and has managed our international business since the merger. He previously served as Senior Vice President, Head of International from November 2003 to October 2007. He served as Executive Vice President — International of Biogen, Inc. from July 2003 until the merger, and joined Biogen, Inc as Executive Vice President — Commercial Operations in August 2001. Mr. Hasler joined Biogen, Inc. from Wyeth-Ayerst Pharmaceuticals, Inc., an affiliate of American Home Products, Inc. (AHP), where he served as Senior Vice President, Head of Global Strategic Marketing from 1998 to 2001. Mr. Hasler was a member of the Wyeth/AHP Executive Committee and was chairman of the Commercial Council. From 1993 to 1998, Mr. Hasler served in a variety of senior management capacities for Wyeth-Ayerst Pharmaceuticals, including Managing Director of Wyeth Group, Germany, and General Manager of AHP/Wyeth in Switzerland and Central Eastern Europe. Prior to joining Wyeth-Ayerst Pharmaceuticals, Mr. Hasler served as the Head of Pharma Division at Abbott AG. Mr. Hasler is a member of the Board of Directors of Orexo AB and Santhera Pharmaceuticals.

Faheem Hasnain has served as our Executive Vice President, Oncology/Rheumatology Strategic Business Unit since October 2007. Prior to that, Mr. Hasnain served as Senior Vice President, Oncology Rheumatology Strategic Business Unit from February 2007 to October 2007 and as Senior Vice President, Oncology Strategic Business Unit from October 2004 to February 2007. Prior to that, Mr. Hasnain served as President, Oncology Therapeutics Network at Bristol-Myers Squibb from March 2002 to September 2004. From January 2001 to February 2002, Mr. Hasnain served as Vice President, Global eBusiness at GlaxoSmithKline and prior to 2000 served in key commercial and entrepreneurial roles within GlaxoSmithKline and its predecessor organizations, spanning global eBusiness, international commercial operations, sales and marketing.

Michael F. MacLean is our Senior Vice President, Chief Accounting Officer and Controller and has served in that position since December 2006. Mr. MacLean joined us in October 2006 as Senior Vice President. Prior to joining us, Mr. MacLean was a managing director of Huron Consulting, where he provided support regarding financial reporting to management and boards of directors of Fortune 500 companies. From June 2002 to October 2005, Mr. MacLean was a partner at KPMG and he was a partner of Arthur Andersen LLP from September 1999 to May 2002.

Craig Eric Schneier, Ph.D. is our Executive Vice President, Human Resources, Public Affairs and Communications and has served in that position since October 2007. Prior to that he was Executive Vice President, Human Resources from November 2003 to October 2007. Dr. Schneier served as Executive Vice President, Human Resources of Biogen, Inc., a position he held from January 2003 until the merger. He joined Biogen, Inc. in 2001 as Senior Vice President, Strategic Organization Design and Effectiveness, after having served as an external consultant to us for eight years. Prior to joining Biogen, Inc., Dr. Schneier was president of his own management consulting firm in Princeton, NJ, where he provided consulting services to over 70 of the Fortune 100 companies, as well as several of the largest European and Asian firms. Dr. Schneier held a tenured professorship at the University of Maryland’s Smith School of Business and has held teaching positions at the business schools of the University of Michigan, Columbia University, and at the Tuck School of Business, Dartmouth College.

Mark C. Wiggins is our Executive Vice President, Corporate and Business Development and has served in that capacity since July 2004. Prior to that, Mr. Wiggins served as our Senior Vice President, Business Development from November 2003 to July 2004, Vice President of Marketing and Business Development from November 2000 to November 2003, and Vice President of Business Development from May 1998 to November 2000. From 1996 to 1998, he was Vice President of Business Development and Marketing for Hybridon. From 1986 to 1996 he held various positions of increasing responsibility at Schering-Plough Corporation, including Director of Business Development.

MANAGEMENT DISCUSSION FROM LATEST 10K

Results of Operations

Revenues

For 2007 compared to 2006, U.S. sales of AVONEX increased $62.8 million, or 6.1%, primarily due to the impact of price increases offset by decreased product demand resulting in lower volume. For 2007 compared to 2006 and international sales of AVONEX increased $98.3 million, or 14.4%, primarily due to the impact of exchange rates and higher sales volume.

For 2006 compared to 2005, U.S. sales of AVONEX increased $83.5 million, or 8.9%, primarily due to the impact of price increases and a reduction in discounts associated with the introduction of the Medicare Part D prescription drug benefit. These increases were offset by lower volume. For 2006 compared to 2005, international sales of AVONEX increased $80.1 million, or 13.3%, primarily due to increases in volume and price, including the impact of patient mix. Foreign exchange accounted for a 0.6% increase in reported revenues; on a local currency basis, international sales increased 12.7%.

We expect to face increasing competition in the MS marketplace in and outside the U.S. from existing and new MS treatments, including TYSABRI, which may impact sales of AVONEX. We expect future sales of AVONEX to be dependent to a large extent on our ability to compete successfully with the products of our competitors.

TYSABRI

Under the terms of a collaboration agreement with Elan Corporation plc, or Elan, we manufacture TYSABRI and collaborate with Elan on the product’s marketing, commercial distribution and on-going development activities. We recognize revenue for sales of TYSABRI in the U.S. upon Elan’s shipment of the product to third party distributors. We recognize revenue for sales of TYSABRI outside the U.S. at the time of product delivery to our customers.

In November 2004, TYSABRI was approved by the U.S. Food and Drug Administration, or FDA, as a treatment for relapsing forms of MS to reduce the frequency of clinical relapses. In February 2005, in consultation with the FDA, we and Elan voluntarily suspended the marketing and commercial distribution of TYSABRI, and we informed physicians that they should suspend dosing of TYSABRI until further notification. In 2005, our net revenue associated with sales of TYSABRI was $4.7 million, which consisted of revenue of $15.1 million from sales that occurred prior to our voluntary suspension, offset by an allowance for sales returns of $10.4 million related to returns of product sold prior to the suspension.

On June 5, 2006, the FDA approved a supplemental Biologics License Application, or sBLA, for the reintroduction of TYSABRI as a monotherapy treatment for relapsing forms of MS to slow the progression of disability and reduce the frequency of clinical relapses. On June 29, 2006, we and Elan announced that the European Medicines Agency, or EMEA, had approved TYSABRI as a similar treatment. In July 2006, we began to ship TYSABRI in both the United States and Europe. In 2006, we recorded revenue on sales of TYSABRI in the U.S. and Europe relating to 2006 activity of $11.9 million and $10.0 million, respectively. Prior to the suspension of TYSABRI in 2005, we shipped product to Elan in the U.S. and recognized revenue in accordance with the policy described above. As a result of the suspension of TYSABRI, we had deferred $14.0 million in revenue related to TYSABRI product that remained in Elan’s ending inventory. This amount was paid by Elan during 2005 and was subsequently recognized as revenue during 2006, when the uncertainty about the ultimate disposition of the product was eliminated. In 2007, we have recorded revenue on sales of TYSABRI in the U.S. and Europe of $104.4 million and $125.5 million, respectively. The increase in 2007 sales over 2006 sales is primarily due to an increase in the number of patients using TYSABRI and increased volumes, as the product was being shipped for the entire 12 months during 2007.

During 2007 and 2006, we had product on hand that had been fully written-off in 2005 due to the uncertainties surrounding the TYSABRI suspension but which is available to fill future orders. As we sold TYSABRI in 2007 and 2006, we realized lower than normal cost of sales and, therefore, higher margins, as we shipped the inventory that had been previously written-off. For 2007 and 2006, cost of sales was approximately $12.6 million and $2.6 million, respectively, lower due to the sale of TYSABRI that had been previously written-off. All TYSABRI inventory that had been previously written-off had been shipped as of December 31, 2007.

FUMADERM

FUMADERM was produced by Fumapharm, which we acquired in June 2006. In December 2006, we acquired the right to distribute FUMADERM in Germany from Fumedica, beginning on May 1, 2007. In connection with the acquisition of the FUMADERM distribution rights in Germany, we committed to the repurchase of any inventory Fumedica had not sold by May 1, 2007. As a result of this provision, we deferred the recognition of revenue on shipments made to Fumedica through April 30, 2007. We resumed recognizing revenue on sales of FUMADERM into the German market in May 2007. Sales of FUMADERM for 2007 and 2006 were $21.5 million and $9.5 million, respectively. The increase in 2007 sales over 2006 sales is primarily due to increased volumes.

ZEVALIN

In 2007, 2006 and 2005 sales of ZEVALIN were $16.9 million, $17.8 million and $20.7 million, respectively, of which $13.9 million, $16.4 million, and $19.4 million respectively, were generated in the U.S. The decrease in total ZEVALIN sales in 2007 compared to 2006 was primarily due to the reduction in sales and marketing efforts in 2007 as we prepared for the sale of our rights to market, sell, manufacture and develop ZEVALIN in the U.S., which was completed in December 2007.

AMEVIVE

In 2007, 2006 and 2005, sales of AMEVIVE were $0.7 million, $11.5 million and $48.5 million, respectively, of which $0.3 million, $5.0 million and $34.9 million, respectively, were generated in the U.S. The decrease in total AMEVIVE sales for 2007 compared to 2006 and for 2006 compared to 2005 was due to the sale, in April 2006, of our worldwide rights and infrastructure related to sales, production, and marketing of AMEVIVE.

Although we sold the rights to this product, we continue to report a small amount of product revenues related to shipments made by certain of our overseas joint ventures, which we consolidate.

Provisions for Discounts and Allowances

Revenues from product sales are recognized when product is shipped and title and risk of loss has passed to the customer, typically upon delivery. Revenues are recorded net of applicable allowances for trade term discounts, wholesaler incentives, Medicaid rebates, Veteran’s Administration, or VA, rebates, managed care rebates, product returns, other applicable allowances and, in 2006 and 2005, patient assistance and patient replacement goods. The estimates we make with respect to these allowances represent significant judgments.

Effective January 1, 2007, we changed the manner in which we administer our patient assistance and patient replacement goods programs. Prior to January 1, 2007, AVONEX product shipped for these programs was invoiced and recorded as gross product revenue and an offsetting provision for discount and returns was recorded for expected credit requests from the distributor that administers these programs on our behalf. Effective January 1, 2007, we entered into a new arrangement with a distributor, which established a consignment sales model. Under the new sales model, gross revenue is not recorded for product shipped to satisfy these programs, and cost of sales is recorded when the product is shipped.

Our product revenue reserves are based on estimates of the amounts earned or to be claimed on the related sales. These estimates take into consideration our historical experience, current contractual and statutory requirements, specific known market events and trends and forecasted customer buying patterns. If actual results vary, we may need to adjust these estimates, which could have an effect on earnings in the period of the adjustment.

Product revenue reserves are categorized as follows: discounts, contractual adjustments and returns.

Discount reserves include trade term discounts, wholesaler incentives and, in 2006 and 2005, patient assistance. For 2007 compared to 2006, discounts decreased $57.2 million, or 55.6%, resulting from a $67.5 million reduction related to the change of patient assistance to a consignment model, offset by increases in trade term discounts and wholesaler incentives. For 2006 compared to 2005, discounts decreased $3.6 million, or 3.4%, reflecting lower amounts of AVONEX distributed through our patient assistance program.

Contractual adjustment reserves relate to Medicaid, VA and managed care rebates and other applicable allowances. For 2007 compared to 2006, contractual adjustments increased $11.9 million, or 12.8%, primarily due to the impact of higher reserves for managed care (associated with higher level of activity with respect to rebates) and Medicaid and VA programs (associated with price increases). For 2006 compared to 2005, contractual adjustments were consistent reflecting more activity in the managed care markets, offset by a reduction in Medicaid activity due to the introduction of Medicare Part D, the expanded prescription drug benefit program.

Product return reserves are established for returns made by wholesalers and our patient replacement goods program in 2006 and 2005. In accordance with contractual terms, wholesalers are permitted to return product for reasons such as damaged or expired product. We also accept returns from our patients for various reasons. For 2007 compared to 2006, returns decreased $16.6 million, or 42.9%, primarily due to a $15.0 million decrease related to the change to a consignment sales model for patient replacement goods. For 2006 compared to 2005, returns increased $12.7 million, or 48.8%, as a result of an adjustment of $6.9 million to increase reserve levels to correct prior period errors, and higher return experience in 2006. These increases were offset by the impact of returns made in connection with the suspension of TYSABRI in 2005.

Reserves for product returns are recorded in the period the related revenue is recognized, resulting in a reduction to product sales. The majority of wholesaler returns are due to product expiration. Expired product return reserves are estimated through a comparison of historical return data to their related sales on a production lot basis. Historical rates of return are determined for each product and are adjusted for known or expected changes in the marketplace specific to each product.

Unconsolidated Joint Business Revenues

We copromote RITUXAN in the U.S. in collaboration with Genentech, Inc., or Genentech, under a collaboration agreement between the parties. Under the collaboration agreement, we granted Genentech a worldwide license to develop, commercialize and market RITUXAN in multiple indications. In exchange for these worldwide rights, we have copromotion rights in the U.S. and a contractual arrangement under which Genentech shares a portion of the pretax U.S. copromotion profits of RITUXAN with us. This collaboration was created through a contractual arrangement, not through a joint venture or other legal entity. In June 2003, we amended and restated our collaboration agreement with Genentech to include the development and commercialization of one or more anti-CD20 antibodies targeting B-cell disorders, in addition to RITUXAN, for a broad range of indications.

In the U.S., we contribute resources to selling and the continued development of RITUXAN. Genentech is responsible for worldwide manufacturing of RITUXAN. Genentech also is responsible for the primary support functions for the commercialization of RITUXAN in the U.S. including selling and marketing, customer service, order entry, distribution, shipping and billing. Genentech also incurs the majority of continuing development costs for RITUXAN. Under the arrangement, we have a limited sales force as well as limited development activity.

Under the terms of separate sublicense agreements between Genentech and F. Hoffman-La Roche Ltd., or Roche, commercialization of RITUXAN outside the U.S. is the responsibility of Roche, except in Japan where Roche copromotes RITUXAN in collaboration with Zenyaku Kogyo Co Ltd., or Zenyaku. There is no direct contractual arrangement between us and Roche or Zenyaku.

Revenues from unconsolidated joint business consists of our share of pretax copromotion profits, which is calculated by Genentech, and includes consideration of our RITUXAN-related sales force and development expenses, and royalty revenue from sales of RITUXAN outside the U.S. by Roche and Zenyaku. Pre-tax copromotion profit consists of U.S. sales of RITUXAN to third-party customers net of discounts and allowances less the cost to manufacture RITUXAN, third-party royalty expenses, distribution, selling and marketing expenses, and joint development expenses incurred by Genentech and us.

Net sales of RITUXAN to third-party customers in the U.S. recorded by Genentech for 2007 were $2,284.8 million compared to $2,071.2 million in 2006 and $1,831.5 million in 2005. The increase in 2007 from 2006 was primarily due to increased unit sales in treatments of B-cell NHLs and chronic lymphocytic leukemia (an unapproved use of RITUXAN), increased utilization for RA and increases in the wholesale price of RITUXAN. The increase in 2006 from 2005 was primarily due to the approval by the FDA of RITUXAN for two new indications, RA and diffuse large B-cell lymphoma and an increase in wholesale prices.

For 2007 compared to 2006, reimbursements of selling and development expenses decreased $2.6 million, or 4.2%. For 2006 compared to 2005, such reimbursements increased $13.5 million, or 28.3%. This increase was primarily due to the expansion of the oncology sales force and development costs we incurred related to the development of RITUXAN for RA.

Our royalty revenue on sales of RITUXAN outside the U.S. is based on Roche and Zenyaku’s net sales to third-party customers and is recorded on a cash basis. Royalty revenues in 2007 compared to 2006 increased $56.8 million, or 29.3% due to increased sales of RITUXAN outside the U.S. Royalty revenues in 2006 compared to 2005 increased $46.5 million, or 31.5%, primarily due to increased market penetration and an increase in prices. The royalty period with respect to all products is 11 years from the first commercial sale of such product on a country by country basis. RITUXAN was launched in 1998 in most European countries and in 2001 in Japan.

MANAGEMENT DISCUSSION FOR LATEST QUARTER
Results of Operations

During the three months ended June 30, 2008 and 2007, we wrote-down $5.5 million and $8.1 million, respectively, in unmarketable inventory, which was charged to cost of sales. During the six months ended June 30, 2008 and 2007, we wrote-down $9.8 million and $14.8 million, respectively, in unmarketable inventory, which was charged to cost of sales.

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, U.S. sales of AVONEX increased $36.0 million, or 13.4%, due to price increases, partially offset by decreased product demand resulting in lower volume. In the six months ended June 30, 2008, compared to the six months ended June 30, 2007, U.S. sales of AVONEX increased $74.4 million, or 13.8%, due to price increases, partially offset by a decreased product demand resulting in lower volume.

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, Rest of World sales of AVONEX increased $29.6 million, or 15.4% due to the impact of exchange rates. In the six months ended June 30, 2008, compared to the six months ended June 30, 2007, Rest of World sales of AVONEX increased $78.5 million, or 21.2%, due to increased unit shipments and the impact of exchange rates.

We are facing increasing competition in the multiple sclerosis, or MS, marketplace in and outside the U.S. from existing and new MS treatments, including TYSABRI, which may have a negative impact on sales of AVONEX. We expect future sales of AVONEX to be dependent, to a large extent, on our ability to compete successfully with the products of our competitors.

TYSABRI

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of TYSABRI increased $99.7 million, or 209.9%, and in the six months ended June 30, 2008, compared to the six months ended June 30, 2007, sales of TYSABRI increased $184.5 million, or 238.7%. These increases are primarily due to an increase in patients using TYSABRI in both the U.S. and Rest of World. Net sales of TYSABRI from our collaboration partner, Elan, to third-party customers in the U.S. for the three months ended June 30, 2008 and 2007 was $99.3 million and $46.8 million, respectively. Net sales of TYSABRI to third-party customers in the U.S. for the six months ended June 30, 2008 and 2007 was $185.6 million and $82.6 million, respectively. We recognize revenue for sales of TYSABRI in the U.S. upon Elan’s shipment of the product to third party customers. We recognize revenue for sales of TYSABRI outside the U.S. at the time of product delivery to our customers.

FUMADERM

In connection with our June 2006 acquisition of Fumapharm, we began recognizing revenue on sales of FUMADERM to our distributor, Fumedica, in July 2006. In December 2006, we acquired the right to distribute FUMADERM in Germany from Fumedica effective May 1, 2007. In connection with the acquisition of the FUMADERM distribution rights in Germany, we committed to the repurchase of any inventory Fumedica did not sell by May 1, 2007. As a result of this provision, we deferred the recognition of revenue on shipments made to Fumedica through April 30, 2007. We resumed recognizing revenue on sales of FUMADERM into the German market in May 2007. Accordingly, we recognized no revenue of FUMADERM through April 30, 2007. For the three months ended June 30, 2008 and 2007, we recognized $10.0 million and $5.2 million, respectively, of sales of FUMADERM. For the six months ended June 30, 2008 and 2007, we recognized $21.7 million and $5.2 million, respectively, of sales of FUMADERM.

ZEVALIN

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of ZEVALIN decreased from $4.3 million to zero, due to the sale of the rights to market, sell, manufacture and develop ZEVALIN in the U.S. to CTI during the fourth quarter of 2007.

In the six months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of ZEVALIN decreased from $9.9 million to $2.5 million, primarily due to the sale of the rights to market, sell, manufacture and develop ZEVALIN in the U.S. to CTI during the fourth quarter of 2007.

CONF CALL

Elizabeth Woo - Vice President, Investor Relations

Thank you. Good morning and welcome to Biogen Idec's earnings conference call for the second quarter 2008.

Before we begin, I'd encourage everyone to go to the Investor Relations section of our website, biogenidec.com and print out the press release and related financial tables. These will be particularly useful when our CFO, Paul Clancy reviews the financial results and the reconciliation to non-GAAP financial measures discussed today. We have also posted slides on our website that outline the topics discussed on today's call.

Let me start with the Safe Harbor statement. Comments made in this conference call include forward-looking statements about the company's expectations regarding future financial results, including our 2008 financial guidance, our longer term operational and financial goals and the sales potential of TYSABRI and other products and pipeline advancements. Such statements are subject to risks and uncertainties which could cause actual results to differ materially from expectations. In particular, careful consideration should be given to the risks and uncertainties that are described in our earnings release and in Item 1.A. of the company's report on Form 10-K and 10-Q and in other reports Biogen Idec filed with the SEC. The company does not undertake any obligation to publicly update any forward-looking statements.

Today on the call, I am joined by Jim Mullen, CEO of Biogen Idec; Bill Sibold Senior Vice President, U.S. Neurology Business Unit; Dr. Al Sandrock, Senior Vice President, Neurology Research and Development and Paul Clancy, CFO and Executive Vice President Finance.

Now I'll turn the call over to Jim Mullen.

James C. Mullen - President and Chief Executive Officer

Thank you, Elizabeth. Good morning everybody and thank you for joining us. Biogen Idec delivered record revenues and profits in the second quarter. This is the third consecutive quarter in which we've grown revenues by more than 25% year-over-year, and as you will see from the Q2 financial results, were an extremely strong growth cycle. Year-over-year revenues grew 28% and earnings grew 30% in the quarter, driven by continued TYSABRI penetration and strong sales from our core products, AVONEX and RITUXAN. Between AVONEX and TYSABRI, our MS franchise continues to expand. We saw an acceleration of TYSABRI patient adds as physicians grow more comfortable with the safety profile.

As we described last September, the ex-U.S. business will continue... will grow faster than the U.S. and we expect international to contribute about 60% towards the TYSABRI 100,000 patient goal. More than half of the 5700 new patients in Q2 were in international markets.

TYSABRI was launched in Crohn's indication at the end of the first quarter 2008. Q2 activities focused on educating healthcare professionals about the operation of the CD TOUCH Prescribing Program. A little over 100 Crohn's patients were on therapy at the end of the second quarter. Elan will provide more color on our upcoming call later this week.

We are making great strides towards our goal of 100,000 patients by year-end 2010. We expect TYSABRI to exit 2008 at over a $1 billion dollar run rate of in market revenues. In this month, we celebrate TYSABRI's two year anniversary since the relaunch and we feel this is a very, very important milestone.

At the end of June, there were 31,800 patients being treated with TYSABRI around the world. Nearly 140,000 have received TYSABRI for 12 months and about 6600 patients have been on therapy for 18 months or longer. Bill Sibold, the Senior Vice President, U.S. Neurology, will take you through an update of the MS franchise in a few minutes.

Then I would like to make a few comments about our pipeline. We are moving our pipeline programs forward. We have initiated several first in human trials this quarter and have a number of important data readouts and late stage programs over the coming months. Baminercept Phase 2b in RA, Hsp90i in GI stromal tumors, Factor IX hemophilia, BIIB14 in Parkinson's disease and RITUXAN in CLL.

With 15 products in Phase 2 and beyond, our pipeline is advancing. Clinical trial activity continues to ramp up significantly this year. Significant R&D investment, both organically and via business development, has yielded a robust pipeline with half a dozen novel compounds currently in late stage trials. ADENTRI will start a Phase 3 trial in this quarter in acute decompensated heart failure and renal insufficiency.

Over the coming quarters, the conversation will increasingly turn to pipeline progress and data. We think the breadth and maturity of our pipeline positions us to continue our growth through the next decade. Dr. Al Sandrock will review the pipeline accomplishments and upcoming milestones in his comments.

I'll conclude my introduction by saying our prospects for growth remain strong. TYSABRI sales nearly tripled compared to the same period last year. Our core products continue to grow. Our pipeline is overflowing and our revenues have grown more than 25% year-over-year for three consecutive quarters.

Given the strong momentum underway, we have raised our full year guidance and we are setting an aspirational goal of generating a record $4 billion in revenues this year. CFO Paul Clancy will take you through the financial and updated guidance in detail.

I will now turn the call over to Bill Sibold, the Head of U.S. Neurology business. Bill?

Bill Sibold - Senior Vice President, US Commercial

Thanks Jim. I am pleased to report that in Q2, we continued the momentum established in 2007 and Q1 2008.

Biogen Idec's leading global MS franchise continues to grow everyday. No one is doing more for MS than Biogen Idec. We have the number one prescribed MS therapy today, AVONEX; we have the product that has established a new level of efficacy, TYSABRI and we have the best and broadest pipeline of MS products for the future.

Turning to Q2 results. Global neurology revenue increased by 32% versus the prior year to $674 million. Our global franchise market share continues to grow. In the U.S. it is now at its highest level since 2005 and it is at its highest level since 2000 outside the U.S.

We expect this trend to continue in step with TYSABRI's growth. AVONEX remains the product to start with and TYSABRI for those patients needing more efficacy. With their clear positioning and strong product profiles, the bulk of relapsing-remitting MS patients are candidates for either AVONEX or TYSABRI. As our pipeline matures, we will have new options for additional patients in need.

AVONEX' global revenue in Q2 was $527 million, up 14% year-over-year. U.S. AVONEX revenue was up 13% year-over-year and international AVONEX revenue was up 15% year-over-year. With over 135,000 patients on therapy worldwide and over 1 million patient years of experience, AVONEX remains the foundation of our global MS business. After 11 years on the market, AVONEX remains the only once-weekly product and is the only product indicated to both slow the accumulation of physical disability and be effective for patients who have experienced a first clinical episode and have MRI features consistent with MS.

Perhaps this is why AVONEX is the treatment most associated with patients in the early stages of disease and with those patients who lead an active daily lifestyle and why it is the number one MS therapy in the world. AVONEX disrupts the disease, not patients' lives.

Now TYSABRI. TYSABRI continues to build momentum and is now on an $800 million run rate with in market revenue of $200 million in Q2. This represents 25% growth over Q1 and an almost three-fold increase over the prior year. Last week we celebrated yet another significant milestone for TYSABRI: its two year anniversary. Of course, the real celebration is for the many patients that have benefited from TYSABRI. Each day, we continue to hear from patients and their physicians about the compelling results that have been achieved.

It is clear that this breakthrough therapy has given new hope and a new option for many patients that suffer from this serious debilitating disease.

A few commercial highlights. Worldwide, TYSABRI continues to be considered the most effective MS therapy by neurologists with more than 9 out of 10 physicians in the U.S. stating this.

Positive switching trends continue. In the U.S., TYSABRI is the most switched to therapy for efficacy and COPAXONE, which is everyday injection, remains the largest single source of TYSABRI patients.

About 80% of patients in the U.S. and nearly 90% of patients internationally are new to the Biogen Idec franchise. And physicians are switching patients to TYSABRI earlier.

This growing comfort and acceptance of TYSABRI's benefit risk profile is evidenced by our updated utilization numbers. As of the end of June, there were more than 31,800 patients on TYSABRI worldwide in the commercial and clinical trial phase. There were more than 17,800 TYSABRI patients in the U.S. and more than 3100 prescribing physicians. Internationally, there were nearly 13,400 patients on therapy in the 35 countries in which TYSABRI is approved. There have now been nearly 13,900 patients on therapy for over one year and approximately 6600 on therapy for more than 18 months. Throughout the year, the number of patients on therapy for two years is expected to increase rapidly.

Additionally, since the last call, TYSABRI was added to the VA formulary for use by neurologists and other prescribers who treat multiple sclerosis. There are five European countries in which TYSABRI has over 10% market share.

And the TOUCH online rollout has continued to be very well received in the US. Because of the substantial service benefits to our prescribers and infusion sites, the majority of the ongoing infusion paperwork is now submitted via TOUCH online.

We believe TYSABRI will continue to build momentum throughout the remainder of 2008. We had a strong Q2. Q3 has started with another significant milestone, the two year anniversary and updated utilization numbers.

Physicians will be hearing about these numbers frequently in the coming days and weeks. Throughout the remainder of the year, the number of patients with over two years on therapy is expected to grow rapidly. We remain confident that TYSABRI will achieve the previously stated goal of 100,000 patients on therapy and become the leading MS therapy in the world.

In conclusion, with the number one prescribed MS therapy today in AVONEX, a product that has established a new level of efficacy, TYSABRI and the best and broadest pipeline of MS products for the future, Biogen Idec is the leader in multiple sclerosis. Our goal remains to provide products and services for MS patients from diagnosis to disease resolution. We are extremely pleased with the results of the second quarter and optimistic about the rest of the year and the future.

I will now hand the call to Dr. Al Sandrock, Senior Vice President, Neurology R&D.

Al Sandrock - Senior Vice President, Neurology Research and Development

Thank you, Bill. Today, I will report on accomplishments in the quarter and we will also mention some upcoming data readouts with some focus on the neurology pipeline that is my responsibility.

We continue to make good progress on advancing and developing our late stage clinical pipeline. We are actively enrolling patients into the four ongoing registrational trials of BG-12 in multiple sclerosis, Lumiliximab in chronic lymphocytic leukemia, Galiximab in non-Hodgkin's lymphoma and Lixivaptan in hyponatremia.

In addition, we expect to initiate a Phase 3 trial of ADENTRI in acute decompensated

congestive heart failure within a few months.

With respect to our early stage development pipeline, we have achieved first patient enrolled in a Phase 1/2 trial of FactorIX in Hemophilia B as well as a Phase 1 trial of toxin conjugated antibody against Cripto in solid tumors. And any day now, we will be enrolling our first patient in a Phase 1 trial of TYSABRI in multiple myeloma, demonstrating our commitment to this molecule.

Regarding TYSABRI, as you know, we just celebrated the two year anniversary of the relaunch of TYSABRI in the United States and the initial launch internationally. And as you have heard, we have not seen a single confirmed case of PML in these two years.

Nevertheless, should a case of PML occur in a TYSABRI treated patient, we can now offer physicians several complementary methods to help the patient. For example, in April, at the American Academy of Neurology meeting, we showed that plasma exchange can rapidly restore the ability of peripheral blood leukocytes to migrate to extra-cell matrix [ph].

And we recently initiated a clinical trial, testing the effect of an approved anti-malarial drug called Mefloquine in HIV patients with PML. Mefloquine was chosen because it has shown excellent anti-viral activity in an in-vitro assay of JC virus infectivity and because it has high central nervous system penetrant.

One final word about TYSABRI. When I go out and talk to my colleagues who treat MS patients, I frequently hear about the remarkable benefits that TYSABRI offers to their patients. For this reason, we are in the early stages of planning a landmark study that more fully evaluates the efficacy of this remarkable drug in multiple sclerosis.

I'd like to take this opportunity to highlight some additional accomplishments in the neurology pipeline. We recently transitioned a humanized antibody to Lingo into preclinical development, putting us on track to go into the clinic with this drug towards the end of next year.

This heralds a new era in MS therapeutics as this would be the first drug to our knowledge that is specifically designed to repair the damage in the central nervous system caused by multiple sclerosis.

We have had multiple abstracts accepted for presentation at the World Congress on Treatment and Research in MS in Montreal in late September. We will present six studies with AVONEX including studies evaluating the long-term 15 year efficacy of the drug as well as the benefits of AVONEX on quality of life.

We will also present six studies on the safety and efficacy of TYSABRI including one study showing the effect of the drug on the proportion of disease-free patients and another study showing the effect of the drug on sustained improvement in disability progression.

Finally, we have two abstracts on BG-12, our oral drug for MS that's currently in Phase 3, including one study showing the effect of the drug on the conversion of gadolinium-enhancing lesions into T1 holes; thus, evaluating the potential role of BG-12 in neuroprotection.

I'll end by reminding you about the data readouts that are anticipated for the remainder of this year. We expect to see data from a Phase 2b trial of baminercept in rheumatoid arthritis, a Phase 2a trail of our adenosine A2A antagonist for Parkinson's disease, a Phase 1/2 trail of the long acting Factor IX in Hemophilia B and a Phase 2 trail of our Hsp90 inhibitor in GI stromal tumors.

In conclusion, 2008 continues to be a very active year in research and development. We are as eager as you are to monitor the progress of these programs. With that, I'll hand the call over to Paul Clancy, our Chief Financial Officer.

Paul J. Clancy - Executive Vice President and Chief Financial Officer

Thanks Al. We delivered other strong quarter of financial results. In Q2, we achieved 28% top line growth with strong performance from all products and geographies and over 30% growth in earnings on a year-over-year basis.

The GAAP financials are provided in tables one and two of the earnings release. Table three includes a reconciliation of the GAAP to non-GAAP financial results and future guidance. Our website also contains a reconciliation. The primary differences between our GAAP and non-GAAP results for the quarter were $73 million related to the amortization of intangible assets, $5 million related to pre-tax employee stock option expense and $16 million tax impact for these items.

Now I'll move on to the non-GAAP P&L operating performance of Biogen Idec. We believe it's important to share this non-GAAP P&L with shareholders since it better represents the ongoing economics of the business and reflects how we manage the business internally and set operational goals.

In Q2, we delivered $0.70 a share as diluted EPS on the GAAP P&L and as after the adjustment shown on table three, our non-GAAP diluted EPS was $0.91 a share, which represents a 30% growth versus prior year.

Now let's move through the second quarter non-GAAP P&L results in a bit more detail. Q2 total revenues were $993 million, representing an impressive 28% growth over the same period last year. Key drivers included the continued growth of AVONEX business, the increasing adoption of TYSABRI and the growth of the RITUXAN franchise in the U.S. and overseas.

Going through our product revenues, I'll begin with AVONEX. Q2 AVONEX worldwide product revenue were $527 million, representing a 14% increase over the same period last year. Q2 U.S. AVONEX product sales were $306 million, representing an increase of 13% on a year-over-year basis, benefiting from price increases. Inventory ended at just over two weeks in the second quarter, unchanged from Q1. On a sequential quarter basis, AVONEX U.S. revenues and units sold were essentially flat. And over the last four quarters, AVONEX units sold in the U.S. had stabilized as our sales and marketing efforts have taken hold.

Q2 international AVONEX product sales were $221 million, representing an increase of 15% on a year-over-year basis. Approximately 9% of this increase in international AVONEX sales was driven by favorable foreign exchange.

While we had a strong quarter when comparing year-over-year results, there was a very modest sequential quarter decrease of 3% for international AVONEX revenues. This was primarily due to a decrease in the German market, attributable to wholesale or forward buying in the first quarter in advance of an April 1st price increase and seasonal buying patterns by our distributors, specifically lower tender business in the Middle East.

Overall, the AVONEX international business from a unit perspective is growing in the high single digits when comparing the first half of 2008 to the first half of 2007.

Q2 TYSABRI worldwide Biogen Idec product revenues increased to $147 million. As Bill highlighted, TYSABRI continues to make strong progress. U.S. end user TYSABRI sales totaled $99 million, which represents a 15% quarter-over-quarter increase. Biogen Idec booked $46 million of this amount. International end user TYSABRI sales totaled $101 million, a 37% increase from the prior quarter. In line with patient numbers, units sold in the U.S. exceeded the international market. However, revenues from the international market exceeded the U.S. due to higher pricing, owing to favorable foreign exchange. Second quarter FUMADERM revenue was $10 million.

Now moving on to the RITUXAN collaboration revenues, which we refer to as revenue from unconsolidated joint business. We recorded $279 million in revenue for the quarter, representing an increase of 21% on a year-over-year basis. This number has three elements.

First, we will receive our share of the U.S. RITUXAN profits. As reported by our partner, Genentech, U.S. RITUXAN sales were $651 million in the second quarter and our second quarter profit share from that business was $178 million, up 16% versus prior year.

Second, we received royalty revenue on sales of rituximab outside the U.S. And in Q2, this was $85 million, up 37% versus prior year due to foreign exchange and strong MabThera revenue growth.

Third, we were reimbursed $16 million for selling and development costs incurred related to RITUXAN. Second quarter royalties were $28 million for the quarter.

Now turning to the expense lines on the P&L, which include the non-GAAP adjustments that I described earlier. Second quarter cost of goods sold was $92 million, which represents approximately 9% of revenues. During the middle of the second quarter, a third party royalty we pay mainly on AVONEX U.S sales expired. This should have a modest benefit to our COGS moving forward.

Second quarter R&D expenses were $249 million, which is approximately 25% of revenues and a 16% year-over-year increase. Increase in our R&D spend were driven by the continued advancement of the pipeline. We plan to have close to half a dozen programs in registrational trials in the second half of 2008 including BG-12, Lixivaptan, Galiximab, Lumiliximab and ADENTRI.

Second quarter SG&A expenses were $242 million. This represents 24% of revenues and a 22% year-over-year increase. Drivers of the year-over-year increase in absolute dollars include investments to support TYSABRI and AVONEX growth as well as unfavorable foreign currency exchange.

Additionally, the second quarter G&A expenses included direct proxy-related expenses of approximately $10 million.

Continuing down the P&L, our collaboration profit sharing line totaled $33 million in expense for the quarter. As a reminder, this represents Biogen Idec's payment of 50% of profits outside the U.S to Elan and the reimbursement of third party royalties incurred by Elan outside the U.S. We expect this number to continue to grow in the coming quarters, reflecting the growth of our international TYSABRI business.

Second quarter other income and expenses was a $7 million loss. Interest expense and interest income roughly offset each other. At the end of the second quarter, we have approximately $1.6 billion of cash and marketable securities and we now have $1 billion of long-term debt. Also in the second quarter, we recognized losses on sales and impairments of investments of approximately $6 million.

Year-to-date, we have repurchased 9 million shares, of which 5 million shares were repurchased in the second quarter.

Q2 tax rate on a non-GAAP basis was approximately 27%, which is slightly lower than our expected full year tax rate. Year-to-date, the tax rate was approximately 28%. The effective tax rate in Q2 was favorably impacted by a discrete one-time benefit. This discrete one-time benefit was due to restructuring of our operations in foreign jurisdictions in the second quarter. We expect our 2008 effective tax rate to be in the 28% to 30% range, which is higher than the second quarter rate. This brings us to our second quarter non-GAAP diluted earnings per share of $0.91, representing a 30% increase over the same period last year.

Now I'd like to conclude by discussing our updated 2008 guidance. Given our strong Q2 performance, we are raising our 2008 financial guidance. We expect full year annual revenue to grow in the mid 20% range over 2007, driven in large part by TYSABRI and favorable foreign exchange. We expect operating margin leverage to be similar to previous guidance and both non-GAAP and GAAP R&D, SG&A expenses for the year to be approximately $2 billion.

I have excluded our collaboration profit sharing line from our $2 billion expense guidance for 2008. I should note, though, that we do expect this line to grow each quarter, reflecting the uptake in increasing profitability of the international TYSABRI business.

Our non-GAAP tax rate is expected to be between 28% and 30% while our GAAP tax rate is expected to be between 31% and 33%. This includes an assumption that the R&D tax credit legislation will be renewed late in the year. This would result in different tax rates for the next two quarters.

Non-GAAP diluted earnings per share is expected to be at or above $3.50, which represents a 28% year-over-year growth rate. This excludes the potential impact of new business development activities for the balance of the year. GAAP EPS is expected to be at or above $2.51.

So, in summary, a very strong second quarter. Our top line growth was strong at 28%, driven by all of our products. We continue to progress and invest in our pipeline and at the bottom line, we delivered 30% non-GAAP and GAAP EPS growth.

Now I'll hand the call over to Jim for his closing comments.

James C. Mullen - President and Chief Executive Officer

Thank you, Paul. In summary, we're extremely pleased with the financial performance for the first half of 2008. We believe that the strong fundamentals of the business across all products and geographies will continue to deliver robust results and create significant value for our shareholders.

Given the strong momentum underway, the key data readouts expected this year, the prospects for the company have never been better. We made significant progress this year towards our 2010 goals, both financially and operationally and we remain confident that we will achieve our goal of 15% top line, 20% bottom line compound annual growth rate as well as make strides towards our mission of bringing more meaningful therapies to patients in needs.

With that, Elizabeth, let's open it up for Q&A.

Elizabeth Woo - Vice President, Investor Relations

Thanks Jim. So Kristen, we are ready now to open up the call for Q&A and we'd ask the participants on the call to limit yourself to one question and then re-enter the queue for follow-up questions to allow all your colleagues to get their questions in. And please state your name and company affiliation. So operator, we can now take the first question.

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