TECFIDERA RESEARCH REPORT

October 25, 2013
Biogen Idec Inc.
Expect Tecfidera to Beat with $220M+
Impact: BIIB reports Q3 results next Mon @ 9am ET. Based on IMS Rx trends, Tecfidera Q3 demand could be $220M+
First Impression
Reporting 3rd week of Q4:13 Multiple Sclerosis scripts.
Tecfidera TRx 4528, +2% wk/wk while "true" NRx is 769, -14% wk/ wk (reported NRx is 1855, -1% wk/wk)

• Despite light "true" NRx due to Columbus Day, TRx market penetration
  reaches 13%, maintaining its lead over Gilenya and Aubagio combined of 12.3%. Even though the "true" NRx has stabilized at ~900 (as previously anticipated), the TRx shows steady growth (TRx +20% QTD vs. +104% Q/Q in Q3) as patient compliance remains high. At this rate, we believe Tecfidera could reach 15%+ market share by YE:13.
  
• Continue to reiterate that Q3 Tecfidera demand likely ~$220M (without stocking) per weekly scripts, higher than cons of $206-220M. Recall BIIB reported Q1 sales of $192M ($110M demand + $82M stocking), closely in line with our TecfiAPP estimate of $103M. BIIB will report earnings on 10/28 (Mon) at 9am ET.
  
• Headline Q3 tecfidera sales could be $300M+ according to IMS and WK. WK monthly sales combined yields $273M for Q3 assuming 100% capture rate. Given the capture rate in Q2 was quite low at 54%, if we conservatively assume 90% capture rate for Q3, this yields $303M for Q3. If stocking is similar to Q2 ($80M), we believe end-user demand could be around $220M, which is in-line with trends from IMS monthly sales data as well.
  
• Tecfidera tracking towards $700M+, according to our TecfiAPP. The two biggest variables are: 1) refill/compliance rate; and 2) "true" NRx normalization level. Both of these variable have stabilized over the past quarter (refill rate at ~88%, "true" NRx at ~900). We believe these are reasonable base assumptions going forward and anything above or below would be up/downside.