EQUITY RESEARCH

RBC Capital Markets, LLC

Michael J. Yee (Analyst)
(415) 633-8522
michael.yee@rbccm.com
John Chung (Associate)
(415) 633-8620
john.chung@rbccm.com

Adnan Butt

(Analyst)
(415) 633-8588
adnan.butt@rbccm.com

Sector: Biotechnology

June 16, 2015

Biogen Idec Inc.

Tysabri SPMS data wrapping up in June; data could
be soon
Our view: Recent update suggests that Tysabri SPMS data could come
early in 2H:15. Given current valuation and very low Street expectations,
we believe risk/reward is skewed to the upside. We continue to view BIIB
as a top large cap idea over the long term given significant pipeline upside,
huge Alzheimer's call options over next few years, and growing balance
sheet and cash balance (capital deployment/M&A options).

Key points:
Clinicaltrials.gov changed the Phase III Tysabri SPMS estimated study
completion date to June 2015, so data could be released this summer
vs. expectations for later this year and old status suggesting Fall '15.
This is consistent with the enrollment completed in July 2013, so twoyear treatment protocol implies that all patients are done by next month.
Bottom line is expectations are very low on Tysabri and we see a 3035%
probability of success (vs. buyside consensus 2025% or lower), which
would lead to up to $12B revenue upside and $4 or more of EPS accretion
(royalty is also paid out to PRGO). Thus, $4 accretion x 20 P/E multiple
implies up to $80 or 20% upside to the stock value over time, which
isn't unreasonable given a new growth driver for this pipeline stock. We
see some modest 15%+ chance of a "mixed" result, e.g., a big subset of
"responders" gets great benefit and BIIB might still try to file with FDA
given the unmet medical need. We see 50% probability there's not enough
signal to file but minimal downside given it's not in Street estimates
because it's viewed as a high-risk study. Bottom line is we like BIIB also
for upcoming Alzheimer's data in July as well as more pipeline catalysts
coming including LINGO in early 2016.

Outperform
NASDAQ: BIIB; USD 388.28
Price Target USD 525.00
WHAT'S INSIDE
Rating/Risk Change

Price Target Change

In-Depth Report

Est. Change

Preview

News Analysis

Scenario Analysis*
Downside
Scenario

Current
Price

Price
Target

Upside
Scenario

314.00
19%

388.28

525.00
35%

565.00
46%

*Implied Total Returns

Key Statistics
Shares O/S (MM):
Dividend:

235.6
0.00

Market Cap (MM):

Yield:
Avg. Daily Volume:

91,479
0.0%
1,274,706

RBC Estimates
FY Dec
EPS, Ops Diluted
P/E
Revenue
EPS, Ops Diluted
2014
2015
Revenue
2014
2015

2014A
2015E
2016E
2017E
13.83
16.65
19.30
22.07
28.1x
23.3x
20.1x
17.6x
9,703.0 10,997.0 12,060.0 12,904.0
Q1
2.47A
3.82A

Q2
3.49A
4.06E

Q3
3.80A
4.36E

Q4
4.09A
4.43E

2,130.0A 2,421.0A 2,511.0A 2,641.0A

2,555.0A 2,742.0E 2,827.0E 2,873.0E

All values in USD unless otherwise noted.

We do see this as a call option but reasons it could work include: 1)

unique composite endpoint designed with experience from prior SPMS
studies and objective timed 25F walk test; 2) registry data and Phase II
data show improvement in ambulation and walking speeds; 3) dramatic
reduction in key CSF inflammation markers (e.g., cytokine CXCL13 see
literature and data inside); 4) 10%+ off-label use and some KOLs think
it does work for some pts and there are "responders" who could drive
benefit for the whole group. See inside for much more details.
Separately, Phase II Tysabri stroke coming soon interesting
opportunity: 1) mechanism and science make sense whereby blocking
T-cells into brain could protect against stroke damage; 2) Gilenya works
similarly and reduced brain damage in preclinical models (but has acute
CV side effects in MS, so can't be developed here); 3) Tysabri might have
longer window to work than current drugs and Phase II is testing within
nine hours of onset. Stroke has been a graveyard for development, with
many failures, so this is only a call option. If treating only 100k of the 12M
strokes per year WW, this could be a $500M+ to $1B opportunity ($20
30/share upside).

Priced as of prior trading day's market close, EST (unless otherwise noted).

For Required Conflicts Disclosures, see Page 10.

Biotechnology
Biogen Idec Inc.

Target/Upside/Downside Scenarios

Investment summary

Exhibit 1: Biogen Idec Inc.

125 Weeks

23JAN13 - 16JUN15
UPSIDE
TARGET
CURRENT

540
440
390
340

565.00
525.00
388.28

DOWNSIDE 314.00

290
240
190

140
20m
15m
10m
5m
2013
2014
2015
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J

BIIB

Rel. S&P 500 COMPOSITE

Jun 2016

MA 40 weeks

With $10B+ of pipeline data reading out in the next 12

months or more, we would own BIIB for favorable risk/reward.
Tysabri SPMS $2B opportunity isn't in consensus, and if it
works, it could be $4+ accretive to earnings, in our view. The
second opportunity is BIIB037 (robust Phase Ib Alzheimers
data recently presented at ADPD). This is relatively early-stage,
with Phase III to begin in 2015 and more data from the ongoing
6mg/kg group coming in H2:15. Furthermore, anti-LINGO MS
data are due in mid-2016. Long-term, we are keenly tracking
the continued uptake of Tecfidera, which may slow down as
it enters its third year of launch, and generic Copaxone could
enter the MS market in 2015. However, we do believe the
positive pipeline events will likely outweigh any slowdown in
its core MS business.

Source: Bloomberg and RBC Capital Markets estimates for Upside/Downside/Target

Target price/base case

Our $525 price target is based on a 27x P/E our 2016E EPS.
This is also possible based on DCF analysis that values the base
business ($314/share) including Tecfidera and hemophilia
programs. For various pipeline programs, we add probability
adjusted value of ~$211/sh total for Tysabri SPMS, ANTILINGO, BIIB037 (5060% POS), $SMNRx, IPF, and ANTI-TWEAK.
Upside scenario
Our upside scenario of $565 is based on similar assumptions as
our base case for the core business (Avonex, Rituxan, Tysabri),
Tecfidera and the new hemophilia franchise (Eloctate,
Alprolix). We assign greater probability adjusted value for the
pipeline (515% higher for each of the six opportunities) as
we gain visibility on their prospects in next 12 months. Key
drivers in 2015 would be data readouts from Anti-LINGO and
Tysabri SPMS, which if both are positive may drive shares
higher toward our upside scenario and increase probability of
success.
Downside scenario
Our downside scenario of $314 is based on DCF analysis
on only the existing core business (Avonex, Rituxan, Tysabri)
plus the contribution from Tecfidera and recently launched
hemophilia franchise (Eloctate, Alprolix). We do not include
any pipeline opportunities as data is limited and many are
high-risk. This is also possible based on a 16x P/E on our 2016E
EPS, at the lower end of the peer group comparables.

June 16, 2015

Potential catalysts for the stock

Series of positive pipeline data: Several of BIIBs key late-stage
blockbuster pipeline drugs are expected to read out in the
next 1218 months, beginning with: 1) Tysabri SPMS in the
H2:15; 2) BIIB037 Phase III initiation and more data from 6mg/
kg dosing in H2:15; and 3) Anti-LINGO in MS in mid-'16. Risk/
reward currently favors the upside, in our view, and if any of
these data are positive, the stock could move 10% or more.

Risks to our investment thesis

Disappointing Tecfidera sales: Outperformance in the stock in
the last two years has largely been driven by the impressive
launch and uptake of its oral MS drug, Tecfidera. In Q3:14,
it missed consensus estimates for the first time and also
reported its first case of a PML-related death. If it continues to
miss estimates or new safety signals emerge, this could weigh
down the stock.
IP litigation overhang: Tecfidera is protected until 2028 on
its dosing patents, but given that several different companies
(FWP, XNPT, ALKS) are working on different formulations of
the active ingredient DMF, BIIB could get pulled into lengthy
patent litigations with any of these companies, which may
create an overhang on the stock as Tecfidera is a significant
contributor to BIIBs top and bottom lines.

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Tysabri for SPMS (Phase III ASCEND readout: early 2H:15)

Background: Tysabri is approved as monotherapy in Crohns disease, as well as in RRMS, with
heralded best efficacy (% ARR of 67%) in reduction of risk of relapse with clinical signs of
slowing of disability accumulation. Tysabri binds to the alpha 4 integrin of adhesion
molecules found on lymphocytes, which prevents its interaction with endothelial cells.
Tysabris overall effect is driven by preventing migration of auto-reactive leukocytes into
target organs, which then exacerbates inflammation.
SPMS (along with PPMS, which is more rare) make up to 40% of MS patients for whom there
are limited treatment options. Patients experience continual axonal damage (neurofilament
light chain in CSF) and demyelination (myelin basic protein) along with widespread, systemic
inflammation (osteopontin, CXCL13 and MMP9 in CSF).
This Phase III study (n=856) examines Tysabris ability (vs. placebo, both IV Q4W of 300mg or
currently marketed dose in RRMS) to slow relapse-independent disability progression in
patients with secondary progressive MS over 96 weeks (24 months). The primary endpoint is
a composite of EDSS, T25FW, and 9-Hole Peg Test.
Exhibit 2: Study overview of Tysabri in patients with SPMS (ASCEND study)
Study Design
Primary Endpoint

Key Inclusion Criteria

Key Exclusion Criteria
Est. Primary Completion Date

Phase III, multicenter, international, randomized, double-blind, placeboThe proportion of subjects experiencing confirmed progression of
disability as measured by a composite endpoint (Expanded Disability
Status Scale (EDSS), Timed 25-Foot Walk (T25FW), or 9-Hole Peg Test
(9HPT)
SPMS 2 years with EDSS 3.0 to 6.5 (inclusive)
RRMS & PPMS
June 2015

Source: Company reports, RBC Capital Markets estimates, clinicaltrials.gov

Four key reasons that Tysabri could work in SPMS:

1.

June 16, 2015

In an open-label Phase IIa (n = 17) 60-week study, decrease in CSF markers of

inflammation, axonal damage, and demyelination (osteopontin, neurofilament, myeline
basic protein) was observed alongside reduction in MRI atrophy endpoints at wk 12 from
baseline. An improvement in EDSS (lowering of score) was also observed (p = 0.01) at wk
60 vs. baseline. These signs of efficacy in reduction of inflammation and tissue damage
suggest that Tysabri might reduce intra-thecal inflammation and axonal damage in
progressive forms of MS, although we note the very small number of patients in trial.

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Exhibit 3: 60 weeks of Tysabri treatment showed reduction of chemokines CXCL13 and

MMP9, key CSF markers of inflammation in SPMS and PMS patients

Source: J Christensen et al, ESTRIMS 2012

June 16, 2015

2.

In a retrospective analysis of two Phase I and II clinical trials of Tysabri in SPMS patients,
an improvement in walking was observed as assessed by the timed 25-foot walk
(T25FW) test. Even though this ad-hoc analysis is limited by the small sample size and
short duration of therapy, if these observations play out in the Phase III study, it would
increase the chance of hitting the primary endpoint as it is a composite endpoint that
includes the T25FW test.

3.

KOLs indicate that Tysabri is used widely off-label for SPMS already. Based on our
discussion with various KOLs, up to 15% of Tysabri use is for SPMS patients, as this is the
best option they have so far. In order to get around the reimbursement hurdle, docs
mentioned that these patients are diagnosed as RRMS so that reimbursement can be
approved. In terms of the Phase III ASCEND study, physicians generally agreed that there
is good chance for it to hit on the T25W endpoint.

4.

Mild EDSS entry criteria may also increase chance of Tysabri showing a benefit. One of
the key inclusion criteria for the ASCEND study is the EDSS score of 3.0 to 6.5. Baseline
data indicate that approximately one-third of enrolled patients have EDSS score
between 3.0 and 5.5. These patients are generally milder SPMS patients who do not
require assistance for walking. KOLs believed that these milder patients are more likely
to have inflammatory lesions, which is the mechanism that Tysabri targets. Thus, we
believe Tysabri is more likely to benefit these milder patients and potentially show a
meaningful difference in the T25FW or EDSS endpoint.

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Tysabri for acute ischemic stroke (Phase II ACTION readout: mid-2015)

In ischemic strokes, blockage in blood vessels to the brain may lead to cerebral infarctions
and cause local death of the tissue. This in turn would lead to loss of neurologic function. T
lymphocytes play an important role in acute ischemic strokes because these T cells are
important to the evolution of brain infarctions and the accompanying neurological deficit. It
is thought that T lymphocytes start to migrate and accumulate in the ischemic brain during
the first five days and thus trigger tissue damage through secretion of proinflammatory
cytokines.
Exhibit 4: T lymphocytes infiltrate and accumulate in the ischemic brain during the first five
days (mouse model)

Source: Shichita et al., Nature Medicine 2009

The ability of T lymphocytes to migrate across the blood-brain barrier and infiltrate the
brain is dependent on the interplay between very late antigen-4 (VLA-4) and vascular cell
adhesion molecule-1 (VCAM-1) on endothelial cells. Therefore, agents that modify VLA-4
function may have an effect in treating acute ischemic stroke. Tysabri (natalizumab), a
humanized monoclonal antibody used in treating multiple sclerosis and Crohnss disease, can
block VLA-4, and thus it may also be effective at treating acute ischemic stroke. However,
there are contradictory animal studies on the effectiveness of treating stroke through
inhibiting T cell migration across the blood-brain barrier.

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Supporting evidence from animal model

In a mouse study of Gilenya, which inhibits T cell migration into inflammatory tissues,
positive results were seen (Nature Medicine, August 2009). Mice intravenously treated with
Gilenya showed significantly reduced infarct volume and reduced number of infiltrating T
lymphocytes after focal brain ischemia was induced. This supports the hypothesis that
immunomodulatory agents may treat ischemic brain injury by preventing the infiltration of T
lymphocytes and thus may even extend the therapeutic time window for neuroprotection.
Exhibit 5: In mouse models, Gilenya (FTY720) significantly reduced infarct growth and the
number of infiltrating T cells

Source: Shichita et al., Nature Medicine 2009

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Controversial evidence from animal models

However, there is also controversial data from animal studies that do not support the use of
T cell-migration-inhibitory agents in treating acute ischemic stroke. In a recent paper (Stroke,
June 2014), animals treated with a monoclonal anti-CD49d antibody that blocks 4-integrin
(Tysabri blocks 4 integrin and does not have Gilenyas acute CV side effects in MS) had
reduced T cell invasions (fewer CD3+ T lymphocytes) by day 5. However, that did not
correspond to a positive effect on stroke outcome. Therefore, more studies are needed in
order to determine if certain immunomodulatory agents such as Tysabri may treat acute
ischemic stroke through preventing T lymphocyte migration.
Exhibit 6: In another mouse model, fewer T lymphocytes did not translate to improved stroke
outcome

Source: Langhauser et al., Stroke 2014

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Valuation
Our $525 price target is based on a 26.6x P/E our 2016E EPS. This is also possible based on
DCF analysis that values the base business ($314/share) including Tecfidera and hemophilia
programs. For various pipeline programs, we add probability adjusted value of $211/sh total
for Tysabri SPMS, ANTI-LINGO, BIIB037 (5060% POS), $SMNrx, IPF, and ANTI-TWEAK.

Price target impediments

Risks to our thesis are disappointing Tecfidera growth and sales, worse than expected erosion
of Avonex/Plegridy franchise, and less than projected growth in Tysabri. However, we think
that competition, market share loss, and new oral MS drugs are well known already by the
Street and reflected in estimates. Failure of BIIB's pipeline programs (ANTI-LINGO for remyelination, Tysabri for SPMS, as well as autoimmune and fibrotic diseases) to have successful
data readouts in the next 13 years would also contribute to downside, given that BIIB's
premium valuation to peers reflects some expectation of success in continued generations of
blockbuster therapies.

Company description
Biogen Idec is one of the world's leading biotech companies, with a focus on neurology,
oncology, and autoimmune diseases. The company's key products include Rituxan for nonHodgkin's lymphoma, Avonex for multiple sclerosis, and Tysabri for multiple sclerosis. Biogen
has significant manufacturing capabilities and an extensive worldwide sales and marketing
infrastructure.

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Biogen Idec, Inc.

Annual and Quarterly Income Statement

($ in millions, except per share)

Fiscal Year Ends December

Michael J. Yee (415) 633-8522

FYA
2012

Avonex + Plegridy
Tecfidera
Rituxan + Gazyva
Tysabri - US Transfer revenue
Tysabri - US revenue
Tysabri - Ex-US sales
Fampyra - Ex-US sales
Eloctate
Alprolix
Oral fumarate (Psoriasis)

2,913

Contracts and other sales

Royalties
Total Revenues
Cost of goods sold

FYA
2013

1QA
Mar-14

2QA
Jun-14

3QA
Sep-14

4QA
Dec-14

FYA
2014

1QA
Mar-15

60
78
186
6,932
858

Research and development

1,323

Sales, general & administrative

1,273
318

85

Total Operating Expenses

3,469

4,104

1,318

1,282

1,291

1,375

5,266

1,337

1,461

1,486

1,543

5,827

6,312

6,613

Operating Income

2,091

2,845

808

1,143

1,224

1,271

4,447

1,218

1,284

1,344

1,333

5,179

5,766

6,314

Provision for taxes

36
67
2,511
303

18
31
2,641
297

128
177
9,703
1,171

1,440

527

446

416

499

1,707

509

540

569

573

FYE
2017

44
169
5,516
545

2,090

22
40
2,421
292

FYE
2016

60

Pretax Income

52
38
2,130
279

FYE
2015

1,138
388
748
57
-

(1)

3,058
2,909
1,195
1,025
935
80
58
76
62

4QE
Dec-15

761
506
297
234
207
19
-

Other Income (net)

777
916
305
266
218
19
37
40
14

3QE
Sep-15

3,005
876
1,127
113
701
713
74
-

Collaboration profit (loss) sharing

745
787
291
275
226
20
22
25
17

755
825
331
273
190
20
54

16

774
700
303
250
283
22
10
16

2QE
Jun-15

(8)
2,837

(6)
803

5
1,148

(16)
1,208

(9)
1,262

14

769
907
342
285
245
22
70
48
15

766
978
343
290
235
24
80
53
18

752
1,035
359
285
220
24
85
55
18

3,041
3,745
1,374
1,133
890
90
289
199
65

3,080
4,301
1,424
1,201
985
98
400
225
76

3,150
4,749
1,514
1,261
1,050
105
475
250
80

32
20
2,555
312

20
20
2,742
334

20
20
2,827
338

20
20
2,873
334

92
80
10,997
1,318

80
190
12,060
1,416

80
190
12,904
1,504

1,888

461

521

537

603

2,122

2,352

2,516

2,191

560

603

608

603

2,375

2,533

2,581

(26)
4,421

(17)
1,201

(3)
1,281

(3)
1,341

(3)
1,330

(25)

(10)

5,154

5,756

5
6,319

524

694

215

309

304

297

1,125

304

333

335

319

1,292

1,381

1,428

Net Income

1,566

2,136

587

838

899

965

3,288

897

948

1,006

1,011

3,863

4,374

4,891

Net income adjusted for diluted EPS calculation

1,566

2,136

587

829

900

966

3,281

900

948

1,006

1,011

3,863

4,374

4,891

EPS - Basic (Non-GAAP)

$6.58

$9.01

$2.48

$3.50

$3.81

$4.10

$13.91

$3.82

$4.08

$4.38

$4.45

$16.71

$19.38

$22.20

EPS - Diluted (Non-GAAP)

$6.53

$8.96

$2.47

$3.49

$3.80

$4.09

$13.83

$3.82

$4.06

$4.36

$4.43

$16.65

$19.30

$22.07

Shares outstanding - basic

238.0

236.9

236.8

236.7

236.2

235.5

236.4

235.0

232.4

229.8

227.3

231.1

225.7

220.3

Shares outstanding - diluted

239.7

238.3

237.8

237.4

237.0

236.3

237.2

235.6

233.4

230.8

228.3

232.0

226.7

221.6

Detailed Sales Summary

($MM)

FYA

FYA

1QA

2QA

3QA

4QA

FYA

1QA

2QE

3QE

4QE

FYE

FYE

FYE

2012

2013

Mar-14

Jun-14

Sep-14

Dec-14

2014

Mar-15

Jun-15

Sep-15

Dec-15

2015

2016

2017

Avonex
US

1,794

1,902

476

498

482

501

1,957

479

484

469

446

1,878

1,600

RoW

1,119

1,104

285

276

260

235

1,056

214

208

203

199

824

880

800

2,913

3,006

761

774

745

777

3,057

755

769

766

752

3,042

3,080

3,150

866

460

585

638

743

2,426

648

712

760

800

4,392

3,270

3,532

10

46

115

149

173

483

177

195

218

235

921

1,031

1,217

876

506

700

787

916

2,909

825

907

978

1,035

5,313

4,301

4,749

US

885

958

234

250

275

266

1,025

273

285

290

285

1,133

1,201

1,261

RoW

745

715

207

284

226

218

935

190

245

235

240

910

985

1,050

1,630

1,673

441

534

501

484

1,960

463

530

525

525

2,043

2,186

2,311

Worldwide Sales

1,500

Tecfidera
US
RoW
Worldwide Sales
Tysabri

Worldwide Sales

Y/Y Growth (%)

Revenue
EPS

2012

2013

Mar-14

Jun-14

Sep-14

Dec-14

2014

Mar-15

Jun-15

Sep-15

Dec-15

2015

2016

9%

26%

50%

40%

37%

34%

40%

20%

13%

13%

9%

13%

10%

2017
7%

11%

37%

25%

52%

61%

74%

54%

55%

16%

15%

8%

20%

16%

14%

Note: Sales summary for Tysabri is reported sales; Biogen books US transfer revenues in income statement above which differs from actual reported sales
Source: Company reports and RBC Capital Markets estimates.

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

Biotechnology
Biogen Idec Inc.

Required disclosures
Conflicts disclosures
The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including
total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated
by investment banking activities of the member companies of RBC Capital Markets and its affiliates.
Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in,
this report. To access current conflicts disclosures, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/
DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza,
29th Floor, South Tower, Toronto, Ontario M5J 2W7.
RBC Capital Markets, LLC makes a market in the securities of Biogen Idec Inc..
RBC Capital Markets is currently providing Biogen Idec Inc. with non-securities services.

Explanation of RBC Capital Markets Equity rating system

An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned
to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to
the analyst's sector average. Although RBC Capital Markets' ratings of Top Pick (TP)/Outperform (O), Sector Perform (SP), and
Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same because
our ratings are determined on a relative basis.
Ratings
Top Pick (TP): Represents analyst's best idea in the sector; expected to provide significant absolute total return over 12 months
with a favorable risk-reward ratio.
Outperform (O): Expected to materially outperform sector average over 12 months.
Sector Perform (SP): Returns expected to be in line with sector average over 12 months.
Underperform (U): Returns expected to be materially below sector average over 12 months.
Risk Rating
As of March 31, 2013, RBC Capital Markets suspends its Average and Above Average risk ratings. The Speculative risk rating reflects
a security's lower level of financial or operating predictability, illiquid share trading volumes, high balance sheet leverage, or limited
operating history that result in a higher expectation of financial and/or stock price volatility.

Distribution of ratings
For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories
- Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick(TP)/
Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively,
the meanings are not the same because our ratings are determined on a relative basis (as described below).
Distribution of ratings
RBC Capital Markets, Equity Research
As of 31-Mar-2015
Investment Banking
Serv./Past 12 Mos.
Rating
BUY [Top Pick & Outperform]
HOLD [Sector Perform]
SELL [Underperform]

June 16, 2015

Count

Percent

Count

Percent

909
713
115

52.33
41.05
6.62

280
125
5

30.80
17.53
4.35

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

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Biotechnology
Biogen Idec Inc.

References to a Recommended List in the recommendation history chart may include one or more recommended lists or model
portfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists include
the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Large Cap (RL 7), the Guided Portfolio: Dividend Growth (RL 8),
the Guided Portfolio: Midcap 111 (RL 9), the Guided Portfolio: ADR (RL 10), and the Guided Portfolio: Global Equity (U.S.) (RL 11).
RBC Capital Markets recommended lists include the Strategy Focus List and the Fundamental Equity Weightings (FEW) portfolios.
The abbreviation 'RL On' means the date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date
a security was removed from a Recommended List.

Equity valuation and risks

For valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, please
see the most recent company-specific research report at https://www.rbcinsight.com or send a request to RBC Capital Markets
Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.

Conflicts policy
RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request.
To access our current policy, clients should refer to
https://www.rbccm.com/global/file-414164.pdf
or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South
Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of research and short-term trade ideas

RBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having
regard to local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary website
to ensure eligible clients receive coverage initiations and changes in ratings, targets and opinions in a timely manner. Additional
distribution may be done by the sales personnel via email, fax, or other electronic means, or regular mail. Clients may also
receive our research via third party vendors. RBC Capital Markets also provides eligible clients with access to SPARC on the Firms
proprietary INSIGHT website, via email and via third-party vendors. SPARC contains market color and commentary regarding
subject companies on which the Firm currently provides equity research coverage. Research Analysts may, from time to time,
include short-term trade ideas in research reports and / or in SPARC. A short-term trade idea offers a short-term view on
how a security may trade, based on market and trading events, and the resulting trading opportunity that may be available. A
short-term trade idea may differ from the price targets and recommendations in our published research reports reflecting the
research analyst's views of the longer-term (one year) prospects of the subject company, as a result of the differing time horizons,
methodologies and/or other factors. Thus, it is possible that a subject company's common equity that is considered a long-term
June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

11

Biotechnology
Biogen Idec Inc.

'Sector Perform' or even an 'Underperform' might present a short-term buying opportunity as a result of temporary selling pressure
in the market; conversely, a subject company's common equity rated a long-term 'Outperform' could be considered susceptible
to a short-term downward price correction. Short-term trade ideas are not ratings, nor are they part of any ratings system, and
the firm generally does not intend, nor undertakes any obligation, to maintain or update short-term trade ideas. Short-term trade
ideas may not be suitable for all investors and have not been tailored to individual investor circumstances and objectives, and
investors should make their own independent decisions regarding any securities or strategies discussed herein. Please contact
your investment advisor or institutional salesperson for more information regarding RBC Capital Markets' research.

Analyst certification
All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of
the subject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly or
indirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of MSCI Inc. (MSCI) and Standard & Poors Financial Services
LLC (S&P) and is licensed for use by RBC. Neither MSCI, S&P, nor any other party involved in making or compiling the GICS or any GICS classifications makes any express or implied
warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties
of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing,
in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special,
punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Disclaimer
RBC Capital Markets is the business name used by certain branches and subsidiaries of the Royal Bank of Canada, including RBC Dominion Securities Inc., RBC
Capital Markets, LLC, RBC Europe Limited, RBC Capital Markets (Hong Kong) Limited, Royal Bank of Canada, Hong Kong Branch and Royal Bank of Canada, Sydney
Branch. The information contained in this report has been compiled by RBC Capital Markets from sources believed to be reliable, but no representation or warranty,
express or implied, is made by Royal Bank of Canada, RBC Capital Markets, its affiliates or any other person as to its accuracy, completeness or correctness. All
opinions and estimates contained in this report constitute RBC Capital Markets' judgement as of the date of this report, are subject to change without notice and
are provided in good faith but without legal responsibility. Nothing in this report constitutes legal, accounting or tax advice or individually tailored investment
advice. This material is prepared for general circulation to clients and has been prepared without regard to the individual financial circumstances and objectives of
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Additional information is available on request.
To U.S. Residents:
This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE, SIPC), which is a U.S. registered broker-dealer and which accepts
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To Canadian Residents:
This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution in
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Dominion Securities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.
To U.K. Residents:
This publication has been approved by RBC Europe Limited ('RBCEL') which is authorized by the Prudential Regulation Authority and regulated by the Financial
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To Persons Receiving This Advice in Australia:
This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been prepared
for general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting on
this material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

12

Biotechnology
Biogen Idec Inc.

or possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product
and consider that document before making any decision about whether to acquire the product. This research report is not for retail investors as defined in section
761G of the Corporations Act.
To Hong Kong Residents:
This publication is distributed in Hong Kong by RBC Capital Markets (Hong Kong) Limited and Royal Bank of Canada, Hong Kong Branch (both entities which are
regulated by the Hong Kong Monetary Authority ('HKMA') and the Securities and Futures Commission ('SFC')). Financial Services provided to Australia: Financial
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pursuant to the Royal Bank of Canada's Australian Financial Services Licence ('AFSL') (No. 246521). RBC Capital Markets (Hong Kong) Limited is exempt from the
requirement to hold an AFSL under the Corporations Act 2001 in respect of the provision of such financial services. RBC Capital Markets (Hong Kong) Limited is
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This publication is distributed in Singapore by the Royal Bank of Canada, Singapore Branch, a registered entity granted offshore bank licence by the Monetary
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To Japanese Residents:
Unless otherwise exempted by Japanese law, this publication is distributed in Japan by or through RBC Capital Markets (Japan) Ltd., a registered type one financial
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. Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.
Copyright RBC Capital Markets, LLC 2015 - Member SIPC
Copyright RBC Dominion Securities Inc. 2015 - Member CIPF
Copyright RBC Europe Limited 2015
Copyright Royal Bank of Canada 2015
All rights reserved

June 16, 2015

Michael J. Yee,

(415) 633-8522; michael.yee@rbccm.com

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