EFTA01199408.pdf

Morgan Stanley PAORGAN STANLEY RESEARCH NORTH ARIERICA David Friedman, M.D. 23. 2r. V Stock Rating Biogen Idec Inc. Overweight Industry V poi The Earnings Keep Coming In•Line Key Ratios and Statistics Upside revs (+279M vs cons) drove the $0.68 EPS Reuters: BIIB.O Bloomberg: BUB US beat: Revs of $2.4B were driven by upside Tecfidera Biotechnology f United Stales of America ($144M vs cons), Tysabri ($91M cons, incl. a lx $54M Shr price. close (Jul 22. 2014) $303.67 or $0.15 catch-up from a reimbursement dispute with Mkl cap. curr (mm) $72.313 Italy) and Avonex (+$30M vs cons). Spending was 52-Week Range VS8.89-203.55 slightly ahead driven by SG&A (+$83M vs cons), offset by a lower tax rate (27% vs 29% in 1O14). Mgt. Fiscal Year ending 12/13 1V14e 12/15e 12/16e increased its 2014 guide to reflect to solid underlying ModelWare EPS (s) 8.92 13.00 16.28 19.61 trends with revs now expected up 38-41% Y/Y (26-28% Prior ModelWare EPS ($) 11.45 15.48 19.32 prior) and EPS of $12.90-13.10 ($11.35-11.45 prior). RE 31.3 23.4 18.7 15.5 Solid product growth continues to support this Consensus EPS ($)§ 8.02 11.53 14.48 17.74 earnings story: Tecfidera continues to grow in the US, Div yld (%) 0.0 0.0 0.0 0.0 Unless ofienwse noted. all metrics are based on Morgan Stanley ModefV/are with better compliance and gross-to-net also impacting framework (please see explanabon Icier in this note). the qtr. ExUS, Germany is now on a -$350M run-rate § a Consensus data is provided by Thomson Reuters Estenes e a Morgan Sbnley Research estimates with France and UK launches expected in 4Q. A robust exUS launch continues to be a key thesis for us and we remain above consensus, bumping our global Tecfidera ests by $400M to $2.88 for 2014E. While Avonex does face volume declines, price and market share gains have kept revs flat. We expect the launch of Plegridy (approved in EU today and US expected in 2H) to accelerate share gains which should continue to keep franchise revs flat Y/Y. And on Tysabri, underlying trends have turned with +3-4% Y/Y vol incr. We have raised our Tysabri revs by -$170M to reflect the full year impact of AIFA (-$96M for Italian reimbursement decision) as well as the strong underlying trends. 1't LINGO data pushed to Jan 2015 (from 4O14), but still plenty of pipeline catalysts over the next 12mo: We don't see the timing change as sig. given that mgt. stated the optic neuritis study is on track and now fully enrolled. While mgt's decision not to disclose the 12mo interim data from LINGO in multiple sclerosis (2H15) means we'll have to wait longer (18mo in 2016) for the more important of the two LINGO datasets, significant catalysts remain incl. Alzheimer's (2H14), Tysabri in SPMS (mid-2015), STX-100, Neublastin and Lupus. Guidance points to strong underlying growth for Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As biz and stock — Biogen remains a top pick: Even a result, investors should be aware that the firm may without the AIFA benefit, guidance still incr. by -$1.30 have a conflict of interest that could affect the or 11%. We've raised our 2014E/2015E EPS to objectivity of Morgan Stanley Research. Investors $13.00/$16.28 from $11.45/$15.48 driven mainly by should consider Morgan Stanley Research as only a product revs offset slightly by incrs to spending. We single factor in making their investment decision. see capital allocation as also becoming an important For analyst certification and other important 2H debate for the stock given the growing cash. disclosures. refer to the Disclosure Section, located at the end of this report. EFTA01199408 Morgan Stanley MORGAN STANLEY RESEARCH July 23. 2014 Brogan Idec Inc. Risk-Reward Snapshot: Biogen Idec (BIIB, OW, PT $395) Pipeline. Tecfidera and Hemophilia Drive Risk-Reward Investment Thesis We are OW Biogen. Our work suggests upside to the launches of Tecfidera in $50200 (.651.4) Europe and Hemophilia. We see Biogen as having the most differentiated and 339300(.30W • highest value pipeline among its peers. • Upside to EU Tecfidera launch: We believe Biogen can hit consensus estimates for EU Tecfidera based on 200 German sales alone. And based on our survey work we see rapid adoption in 100 Europe, ahead of consensus. oisaissassisLiamirisaiiiissi JtS12 Jan-I3 Jul.13 Jen-I4 Jul.14 Jul45 • Upside to Hemophilia: Our channel checks suggests prophylaxis patients • Ace Tama (046) —netegnaiSne•Pernanrce • CvnernSixt Pint will switch rapidly. putting our estimates ahead of consensus and mgmt Seine: Morgan Stinky Research estimates. Thomson ReuIers commentary. We believe patients are Price We derive our PT from a discounted cash flow analysis that uses a WACC of 10% and seen by their physicians often enough Target a 2% terminal growth rate. The main drivers are Tecfidera. the hemophilia franchise. for a quick switch. Plegridy/Avonex and the pipeline $395 • Underappreciated durability of Bull DCF Outsized penetration of Tecfidera into both the US and ROW markets; a faster Hemophilia launch and more conversion to injectable MS franchise: We see Case long-acting agents and a lower discount on pipeline assets. We daclizumab and Plegridy as $502 assume: underappreciated assets that can move 1) -$7.78 in global Teclidera sales. 2) Modest growth in Plegridy/Avonex sales through 2020E to the needle. Our survey work suggests -$3.58. Avonex/Plegridy can take >50% of the 3) Global hemophilia sales of -$28 ($1.28 to Biogen). injectable segment and daclizumab, 4) -$115/sharear he pipeline. and even with Phil like efficacy, will 5) Unchanged spending from our base case scenario penetrate the y d line market. Base DCF -36% 1M/2e3 line Tecfidera market share, declining Case Avonex/Plegridy total share but growing share of injectables, modestly faster Hemophilia launch than consensus and less • Best pipeline in the industry: We are $395 most excited about anti-LINGO, than 50% discounted value of the pipeline. We assume: 1) -$6.58 in global Tecfidera sales by 2020E. BIIB037 SMNRx and DMPK. The 2) Flat Plegridy/Avonex sales through 2020E at $38. 3) Global hemophilia sales of -$1.58 ($18 to Biogen). and pipeline is not without risk, but there is 4) Margin expansion of -650 bps as leverage is achieved with solid mechanistic rationale, high unmet Tecfidera need and reasonable development Bear DCF -30%1":'2n° line Tecfidera market share, declining paths. Case AvonexPlegridy S share, a slow Hemophilia launch and no pipeline. We assume: Risks to our price target $228 1) -$5.58 in global Tech:lora sales by 2020E. 2) Declining Plegridy/Avonex sales to $28 from -$3B by 2020E. 1) Slower than expected launches of 3) Global hemophilia sales of -$1.38 ($800M to Biogen). Tecfidera and Hemophilia, 2) Pipeline 4) $0/share for the pipeline, and disappointments, 3) Injectable share 5) No margin expansion losses to generic Copaxone. 2 EFTA01199409 Morgan Stanley MORGAN STANLEY RESEARCH July 23, 2014 Slogan Idec Inc. Estate 1 Biogen Idec 2014 Variance 2014E 2O14A Consensus MSe %YIY Actual % Difference 2014E Difference Product Sales (PM): AvonexlPlegndy $753 -3% $774 0% 3% $744 $30 4% Tysabri' $423 9% $533 38% 26% $442 $91 21% Tectdera $580 202% $700 265% 21% $556 $144 26% Daclzurnab $0 NM 50 NM NM 0% Fampyra (EU only $21 25% 322 33% 6% rumor) $16 0% $16 I% 1% Societe $3 NM 50 NM -100% Alpeolx $0 NM $10 NM NM Other SO NM 50 NM NM Legacy Revenues SO NM 50 NM NM Total Product Sales $1.795 30% $2.056 48% 15% $1.766 $270 15% Rittman Profit Share 5295 2% $303 5% 3% $296 $7 2% Royalty Revenue $45 18% $40 6% -10% $59 419 -32% Corporate Panner Revers.* $15 41% 322 102% 43% Total Revenues $2,150 25% 52.421 40% 13% $2.142 $279 13% COGS $276 20% $292 27% 6% $285 $7 2% Gross Profit $1.874 26% $2.130 43% 14% $1857 $273 15% M $420 29% $446 36% 6% $442 $4 I% SCIAA $510 19% $575 34% 13% $492 $83 17% Colaboration ProM Sharing $0 NM 50 NM NM Other $3 NM ($35) NM -1110% Operating Income $940 27% $1.143 55% 22% $924 $219 24% Other income (expense). net ($12) NM $5 NM NM Pretax Income $928 29% $1.148 59% 24% 914 234.286 26% Taxes $264 49% $309 74% 17% 248 60.621 24% Tar rate 29% 16% 27% 10% -6% 27% -1% Net Income, Non-Controllirg Int. 51 -56% $11 361% 956% Net Income (Non-OAAP) $663 22% $829 53% 25% $666 $163 24% Non-OW EPS (excl. options) $2.80 23% 53.49 54% 25% $2.80 $0.69 25% OW EPS $2.46 27% $3.01 48% 22% Diuted Shares Outstanding 237 -I% 237 NM 0% 238 -I 0% Gross Margin 87% 1% 88% 2% f% 87% f% M(% ol Sales) 20% 3% 18% -3% -6% 21% -1f % SG&A (% of Sales) 24% -5% 24% -5% 0% 23% 3% Operating Margin 44% 2% 47% 10% 8% 43% 9% Seine: Bingen Mee Aneysl Consensus Poll (414:141. lAorgan Stanley Research 3 EFTA01199410 Morgan Stanley MORGAN STANLEY RESEARCH July 23, 2014 Biogen 1dec Inc. Exhil:41 2 Biogen 1dec Income Statement 5020E 144:4)11414444% 3.153 3.470 1923 4.166 5142 1 743 2056 9.142 9.154 18319 11267 12,021 n.isi laan 134:01$0041104:411)49, 31$ 1196 1577 9)7 1.138 1.124 297 »3 1244 1.324 1347 1.433 1.(A1 1.50 Ratay 124 137 159 li 5 lled 11 40 I13 in 9) 90 81 73 Ce7ette gantet 5 32 57 44 ?.. 52 77 674 110 116 122 III IU leid Rampe 4.217 43,0 10-11 %WS 1131 2.130 2.414 I 1.4 104%6 14464 12.470 13.2 14.491 11211 I Clarawa Reim» .., nd ägliiiMIMM 00,35 382 450 467 445 656 271 292 310 Aß 1.219 1273 1.650 1.4(41 0478 1174 1.777 ems P"er 3.995 4216 4.669 1019 6.075 1/351 2130 2.159 2.267 8.414 9392 10166 11.377 12574 12121 13177 1201 12% 1215 1.223 1.440 627 446 CM 521 1187 2050 4110 2.205 2213 2317 1374 5414 693 699 1.04-9 1.211 1.107 503 510 413 573 2.166 2260 2381 2.467 2503 2544 2711 encenednn cqund dneek 1,4" .1 3 • • 4 15 15 15 15 15 IS 15 Caletcretron groll tredd 218 258 318 3% 05 6YI<nX%olnylb 25 4 39 0 Ab TO Ideen In:4m as 22 19 23 i2 4 16 8 3 31 28 37 64 01 42 e9 mereetemse 1351 06) 33 -37 -31 10 .10 .10 •10 d3 .30 -38 d 0 0 MS oPee1-47040 0044) 25 1151 2 14 .26 -0 00 0 0 4 0 0 0 0 0 0 ROM. knon• 11412 1104 IS% 2.035 2.433 802 1.144 1.117 1.152 4211 5.114 UM 4.714 7.»1 7327 11326 Tu» 453 447 V» 524 494 215 3% 331 314 1.133 1352 1.546 1.705 1216 1.937 20% Fm liste 27% 271 29% 25% 24',. 23% 27% 27% 27% V% 29% 26% 25% 25% 248 24% 110 emene em.94.441 1310 1257 1.418 1.571 2.1» 547 HO 815 2» am ;tu 4.613 6.114 SAS LM 6340 rie«orte rron rowrinm 41114141 15 42 32 4 13 0 ui 1 1 n 15 15 e 15 15 15 TSeFeWbBOOMIXUOSMI 2.195 1.315 1.43? 1.507 2.125 517 Ufo 514 444 2.077 3347 4.4» 4.981 5.450 5374 6315 342 322 044244704544444 1(09 287 123 73 95 49 27 2.8 30 134 148 113 17.9 1B5 21.6 318 o• Armier remse 7.6% 13% Ob% 03% 03% 0.98 03% 03% 03% 03% 03% en% (14% 0314 04% Ob% 4,4 inee 494 21 1.1 13 24 I3 0.7 0.6 03 38 32 4.2 44 49 13 53 Ne dem% 01041.13.4441 4711011 1.094 1293 1.426 1362 2314 C4.3 027 612 843 3):48 3.736 4.416 49711 6.436 5.938 4.497 14440.4410 EPS 4430.44444440 1,171 1507 »BI NM UM 1145 um 1343 5352 11296 31429 11993 $2253 12532 524.0 19326 01.4Itlet Imme 801 2.040 1224 4384 UP/ 4» 711 ns 772 2.712 44» 4,177 4,722 9.188 4010 8204 04.4. OPIInt •50111 1195 »St 1410 56.79 3258 12.02 1301 1907 $324 31145 $15.18 11850 12133 12416 32753 UI» Sod Stund . (114-11 287 252 242 213 236 237 237 236 235 2% 229 »5 220 214 206 195 018409,4444 C-4.44 2» 256 246 240 23e, 2» 237 236 335 237 220 226 221 215 2» 195 01.44.0541444 ntn44.18 »A 256 245 240 233 235 237 236 237 237 230 226 221 215 216 195 SD» C4741.. . dar. 54,•d11Dr 4:0444.4-td1 91% • 92% 91% 90% 24% 87% 85% 87% 87% BI% äw 98% 41% ew äw 81% 5414 de a 51 %Rd 20% 21% 21% 23% 24% 24% 22% 22% 22% 23% 21% 20% 19% 19% ui% isn -w.%0144%41 29% 26.% 24% 24% 21% 25% 18%CEL P 3:311. 353# 1! 150: 18% V% 07% 16% 15% OPealna Viren 37% 39% 31% 32% 42% 38% • 0% 31: 291 1 e it 4% e la 441% 51% 51% 53% 54% 55% CI3114941.er 47% 46% 47% 44% 491 46% 64% 52% 61% .5 1% 41% 59% 57% 69% 60% 61% 444 1.14 27% 28% 29% 23% 317 29% 31% 33% 33% 32% 35% 37% 3.9% 40% 41% 42% Tc1alnednu• 7% 4% 1% 10% 26% 51% 40% 56% 23% 39% 11% 11% Im 6% 6% 6% 0303 5% IM in. 67% 109% 217,129.2 1 11, E 9 4% 10% 7% 6% 6% 8% 204 9% 9% 86% 21% 211t. 1% 6% %I 2% 2% 2% Mi4 12% 5% PM 31% 45% 26% 29% 4% 4% 8% 5% 2% 2% e».0444 (PS 19% Z.% 14% 12% 36% 25% 54% 48% 53% 46% 25% 20% 19% 12% 14% 15% Ornir04.9e1C011, 4% 2% 4% 108 4% 10% 6% 11% 6% 9% 6% »I 2% 2% 2% (0113.84 1% .6% II% 4% 7% 4% »I 4% 5% 4% »I »4 3% 2% Seine: Company Dala Morgan Staney Research EFTA01199411 Morgan Stanley MORGAN STANLEY RESEARCH July 23. 2014 Slogan Mee Inc. Exhitrl 3 Biogen Idec Product Revenues Product Revenue 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E 1014A 2014A 3014E 4014E Avonex)Plegridy worldwide sales 2,323 2.518 2.687 2.913 3.005 761 774 771 788 3.094 2.899 2.748 2.795 2.829 2.898 2.966 US 1406 1.492 1.629 1.794 1.902 476 498 496 509 1.979 1.919 1.901 1.985 2.054 2.125 2.198 Ex-US 917 1.027 1.058 1.119 1.100 285 276 275 279 1.115 980 848 611 775 771 768 Tysabil worldwide sales 1.059 1.230 1.511 1.631 1.871 441 533 475 514 1.963 2.002 2.043 2.088 2.112 2.138 2.168 US 509 593 747 886 957 234 250 265 295 1.044 1.099 1.146 1.197 1225 1.253 1.283 Ex-US 551 637 764 745 714 207 283 210 219 919 904 897 891 887 884 883 Teatime 878 506 700 773 857 2.836 3.659 4.563 5.251 5.891 6.092 8.518 US 867 460 585 618 654 2.317 2.757 3.377 3.781 4.059 4.354 4.667 Ex-US 9 46 115 155 203 519 903 1.186 1.470 1.631 1.738 1.851 Daclizumab 160 256 383 533 697 US 104 166 247 340 433 Ex-US 56 90 137 193 264 Fampyra (EU only) 14 57 74 19 22 23 22 86 102 118 134 151 161 164 Fumadeem 50 51 55 60 63 16 16 16 16 63 68 70 73 77 81 85 Hemophilia o 10 37 57 104 425 817 670 779 885 996 US' ELCCTATE 0 0 30 45 75 334 450 463 539 607 666 US' ALPROUX 0 10 7 10 27 67 102 115 129 143 155 ROW 0 0 0 2 2 24 65 91 111 136 174 Cchet 4 0 Legacy Revenues Total Product Revenues 3.153 3.470 3.823 4.166 5.542 1.743 2.056 2.095 2.254 8147 9.154 10.319 11.267 12.021 12,786 13.592 Ritusen Profit Share 1.095 1.077 997 1.138 1.126 297 303 309 282 1.191 1.284 1.326 1.387 1.420 1.501 1.555 Royalty Revenue 124 137 158 215 186 38 40 50 58 186 123 111 99 90 81 73 Corporate Panret Revenue 5 32 57 44 78 52 22 15 Ii 103 105 110 116 122 128 134 otal Revenues 2.130 2.421 2.468 2.606 4 10.66$ 11.866 12.870 14.495 Soiree. Company Data. Morgan Stanley Research EFTA01199412 Morgan Stanley MORGAN STANLEY RESEARCH July 23. 2014 Biogen Idec Inc. Exhibit Biogen Idec Balance Sheet 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E Cash and Equivalents 582 760 515 571 603 1.894 2.994 4.399 5.809 7.335 10,007 12.934 Marketable securities 682 448 1.176 1.135 620 661 696 741 787 851 932 1.021 Accounts Receivable 551 605 585 687 824 1.144 1.268 1.411 1,530 1,623 1,724 1.826 Inventory 294 289 327 447 659 937 978 1.075 1,147 1,212 1,286 1.365 Due from unconsolidated joint business 194 222 229 268 253 267 288 297 311 319 337 349 Deferred Tax Asset 89 112 0 0 0 0 0 0 0 0 0 0 Other 89 104 145 136 226 314 348 387 420 445 473 501 Total Current Assets 2.481 2.540 2.975 3.244 3,185 5,217 6.573 8.312 10.005 11,786 14,759 17.996 Marketable securities 1.194 743 1,417 2.037 626 747 855 990 1,127 1,318 1,562 1.829 Property 8, Equipment. Net 1.637 1.642 1,571 1.742 1.751 1,871 1.990 2.112 2,223 2,315 2,386 2.433 Intangible assets. net 1.871 1.773 1.608 1,632 4.475 4,012 3.675 3.353 3.025 2,695 2.340 1.959 Goochvil 1.139 1.146 1.146 1.201 1.233 1.233 1.233 1.233 1.233 1.233 1.233 1.233 Investments and other assets 230 248 332 274 594 594 594 594 594 594 594 594 Total Assets 8.552 8.092 9050 10.130 11.863 13.673 14.921 16.593 18208 19.941 22.874 26.045 Current portion of debt and line of credit 20 137 3 453 3 0 0 0 524 0 0 0 Taxes Payable 76 85 46 20 180 180 180 180 180 180 180 180 Accounts Payable 119 163 186 204 220 313 326 359 383 405 429 456 Accrued expenses and other 501 666 677 980 1,355 1,804 1.846 1.934 2.026 2.103 2.155 2.209 Total Current Liabilities 715 1.050 913 1.657 1.758 2.296 2.353 2.472 3.112 2,687 2.764 2.845 Notes payable and other (roaming 1.080 1.066 1,061 687 592 585 574 563 27 27 27 27 Long-Term Deferred Tax Liability 241 201 249 217 233 233 233 233 233 233 233 233 Other Long Term Liabilities 254 326 400 604 659 878 898 941 985 1.023 1.048 1.075 Total Liabilities 2.290 2.643 2,623 3.166 3242 1992 4.057 4.208 4.357 3,970 4,073 4.179 Common Stock 0 0 0 0 0 0 0 0 0 0 0 0 Additional paid-in capital 5.782 3.895 4,185 3.855 4.024 2.361 39 -2.632 -5.914 -8.997 -11,872 -15.030 Accumulated other comprehensive income 50 -22 -27 -55 -28 -28 -28 -28 -28 -28 -28 -28 Retained Earnings 1.069 1.872 3.107 4.487 6.349 9.061 12.549 16.726 21.460 26,648 32,337 38.545 Treasury stock -680 -350 -840 -1325 -1725 -1,725 -1725 -1,725 -1725 -1,725 -1,725 -1725 Total Biogen Idec. Inc. shareholders equity 6.222 5.397 6.425 6.962 8.620 9.669 10.836 12.342 13.793 15.898 18,713 21.763 Noncontrolling interests 40 53 1 2 1 13 28 43 58 73 88 103 Total Shareholders Equity 6.222 5.397 6.425 6.962 8.621 9.682 10.863 12.384 13.851 15.971 18.801 21.866 Total Liabilities & Shareholders' Equity 8.552 8.092 9.050 10.130 11.863 13.673 14.921 16.593 18.208 19.941 22.874 26.045 Source: Company Ca lAorgan &anky Rezoarch EFTA01199413 Morgan Stanley MORGAN STANLEY RESEARCH July 23. 2014 Biogen ldec Inc. Exhidi 5 Biogen Idec Cash Flow Statement 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E Net Income (Loss) 977 899 1.267 1.380 1,862 2.724 3,504 4.192 4,748 5.203 5.705 6,223 Depreciation & Amort. 428 354 359 366 532 685 595 623 673 723 799 878 Depreciation 138 145 144 164 189 222 259 300 345 393 444 498 Amortization 290 209 215 201 343 463 336 323 328 330 355 380 Share-based compensation 161 168 113 119 136 113 115 116 118 120 122 124 Deferred Income Taxes -137 -81 154 -117 -245 0 0 0 0 0 0 0 Teddera milestone payments 0 0 0 0 0 -350 -1200 -1.200 -1,800 -900 0 0 Other -2 282 20 29 -28 -1 -1 -1 -2 -1 0 0 Changes in Operating Assets and Liabilities Accounts Receivable -100 -99 -73 4 -127 -320 -124 -143 -119 -93 -100 -102 Inventory -43 -5 -59 -140 -244 -278 -42 -97 -72 -65 -74 -79 Other assets 35 -41 -50 -67 -160 -102 -55 -49 -47 -33 -46 -40 Accrued expenses and other current iabirrties -49 131 34 273 284 542 56 120 116 99 77 80 Other liabiities and taxes payable -195 18 -36 34 334 218 21 43 45 38 26 26 Net Cash From Operations 1.075 1.625 1.728 1.880 2.345 3.232 2.869 3.604 3.660 5.091 6.509 7.110 Net (Purchase) Proceeds Marketable Securities -229 680 -1.420 -585 1,912 -162 -143 -180 -183 -255 -32 -356 Inaease In PP&E -166 -173 -206 -255 -246 -342 -379 -422 -457 -485 -51 -545 Net disposals (acquisitions) 0 -162 -24 -104 -3,278 0 0 0 0 0 0 Investment In Research Collaboration 0 0 0 -7 0 0 0 0 0 0 0 Other 7 0 0 0 0 0 0 Net Cash From Investing -395 345 -1,650 -950 -1,605 -503 -522 -602 -640 -740 -84 -901 Purchase &treasury stock -751 -2.078 -498 -985 -400 -1.450 -1.248 -1.592 -1.602 -2.303 -2.99 -3.283 Proceeds from issuance of stock for stock comp 48 183 315 67 67 13 6 3 1 1 Excess tax benefit from share-based compensation 3 13 51 55 73 11 5 2 1 0 Proceeds From Issuance of Long-Term Debt 0 126 0 0 0 0 0 0 0 0 Repayments Of Long-Term Debt -11 -18 0 0 -452 -10 -10 -10 -10 -523 Net distributions to noncontrolli-ig interests 4 -23 -27 -3 0 0 0 0 0 0 Other -18 12 -160 -12 -4 0 0 0 0 0 Net Cash From Financing -724 -1.785 -320 -877 -717 -1.437 -1247 -1.597 -1.610 -2825 -2419 -328 Net Change In Cash & Equivalents -44 185 -242 52 24 1.292 1.100 1.405 1.410 1.526 2.67 2.92 Effect of exchange rate changes 4 -7 -3 4 8 0 0 0 0 0 Cash Balance Beginning Of Year 622 582 760 515 571 603 1.894 2.994 4,399 5.809 7.33 10.00 Cash & Equivalents Balance Year-End 582 760 515 571 603 1.894 2,994 4.399 5,809 7.335 10.00 12,934 Saute. Company Daia. ',Wigan Stanley Rezeasch EFTA01199414 Morgan Stanley MORGAN STANLEY RESEARCH Jury 23. .I 2el d cinc. 8 EFTA01199415 Morgan Stanley MORGAN STANLEY RESEARCH July 23,2014 Bågen Idet Inc. unpnAS STAGICY Morgan Stanley ModelWare is a proprietary analytic framework that helps clients MI ModelWare uncover value, adjusting for distortions and ambiguities created by local accounting regulations. For example. ModelWare EPS adjusts for onetime events, capitalizes operating leases (where their use is significant), and converts inventory from LIFO costing to a FIFO basis. ModelWare also emphasizes the separation of operating performance of a company from its financing for a more complete view of how a company generates earnings. Disclosure Section The information and opinions in Morgan Stanley Research were prepared by Morgan Stanley & Co. LLC. and/or Morgan Stanley MIR S.A.. and/or Morgan Stanley Mexico. Casa de Boise. S.A. de C.V.. ' gan Stanley Canada Limited. As used in this disclosure sec ion, Morgan Stanley includes Morgan Stanley & Co. LLC, Morgan Stanley SA, Morgan Stanley Mexico, Casa de Balsa. S.A. de C.V.• Morgan Stanley Canada Limited and their affiliates as necessary. For important disclosures, stock price chans and ' " • " t are the subject of this report, please see the Morgan Stanley Research Disclosure Website at . or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (A en ion: esear anagemen , ew , Y, 10036 USA. For valuation methodology and risks associated with any price targets referenc in this research report, please contact the Client Support Team as follows: US/Canada +1 600 303.2495; Hong Kong +852 2848-59S9: Latin America +1 718 754-5444 (U.S.); London +44 (0)20-7425.8169: Singapore +65 68346860: Sydney1.61 (0)2.9770-1505; Tokyo +81 (0)3.6836-9000. Mtematively you may contact your investment representative or Morgan Stanley Research at 1585 Broadway. (Attention: Research Management). New York. NY 10036 USA. Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Matthew Harrison. Unless otherwise stated. the individuals listed on the cover page of this report are research analysts. Global Research Conflict Management Policy With our conflict management policy, which is available at Important US Regulatory Disclosures on Subject Companies As of June 30, 2014. Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Akebia Therapeutics Inc. Alnylam Pharmaceuticals, AMAG Pharmaceuticals. Inc.. Auxilium Pharmaceuticals. Cubist Pharmaceuticals Inc., GW Pharmaceuticals PLC. Idenix Pharmaceuticals. Inc., ImmunoGen Inc.. Ironwood Pharmaceuticals Inc.. Ophthotech Corp. Within the last 12 months. Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Akebia Therape