Elizabeth Woo - VP of IR Jim Mullen - CEO Bob Hamm - SVP of Neurology Business Unit Evan Beckman - SVP of Immunology, R&D Peter Kellogg - CFO

Jim Birchenough - Lehman Brothers Mark Schoenebaum - Bear Stearns Bill Tanner - Leerink Swann Michael Aberman - Credit Suisse Geoff Meacham - J.P. Morgan May-Kin Ho - Goldman Sachs Ian Somaiya - Thomas Weisel Partners Joel Sendek - Lazard Capital Markets Geoffrey Porges - Sanford Bernstein George Farmer - Wachovia Securities Chris Raymond - Robert W. Baird & Company Maged Shenouda - UBS William Sargent - Banc of America Securities

Good morning. My name is Jennifer and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Idec Second Quarter 2007 Earnings Release Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Ms. Elizabeth Woo, Vice President of Investor Relations.

Thank you, Jennifer. Welcome to Biogen Idec's Earnings Call for the second quarter 2007. Before we begin, I would encourage everyone to go to the investor relations section of our website, biogenidec.com, and print out the press release and accompanying table. It will make it easier to follow along when our CFO, Peter Kellogg, reviews the financial results and the reconciliation to non-GAAP financial measures discussed today. We are continuing the practice we introduced last year on the call of posting slides on our website that follow the topics on the call today. I will 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 financial guidance for 2007 and future growth rate, the launch and potential of TYSABRI in MS and RITUXAN in RA, reimbursement for TYSABRI, and plans for external growth and pipeline growth. Such statements are subject to the risks and uncertainties, which could cause the actual results to differ materially. In particular, careful consideration should be given to the risks and uncertainties that are described in our earnings release and in the item 1(a) risk factors section of the company's quarterly report on Form 10-Q for the quarter ended March 31, 2007, and other periodic and current reports Biogen Idec has filed with the Securities and Exchange Commission. The Company does not undertake any obligation to publicly update any forward-looking statements. On today's call, I am joined by Jim Mullen, CEO of Biogen Idec; Bob Hamm, Senior Vice President, Neurology Business Unit; Dr. Evan Beckman, Senior Vice President, Immunology, of our research and development efforts; and Peter Kellogg, our CFO and Executive Vice President of Finance. Now, I will turn the call over to Jim Mullen.

Thank you, Elizabeth. Good morning, everyone. I am very pleased with the results this quarter. We have made excellent progress on a number of strategic initiatives to grow revenues and earnings and enhance our pipeline. Let me touch on a few highlights before I turn the call over to Bob, Evan, and Peter. We continue to deliver strong revenue growth, 17% growth this quarter. Our global MS franchise passed $500 million in sales this quarter, led by AVONEX and further bolstered by solid progress from TYSABRI. And this performance demonstrates a successful execution of our strategy, which is innovation drives growth in the MS market, where high in that need remains. For RTUXAN is showing nice growth in both the oncology and the RA indication. During the quarter, also we completed "Dutch Auction" tender offer repurchasing $3 billion worth of shares, which is approximately 16% of our shares outstanding. This major share repurchases returns value to shareholders and will be accretive to earnings, at the same time we more optimally leverage the balance sheet. We do retain the financial capacity and flexibility to continue our successful BD efforts and will continue to remain active in that arena. Couple of comments about TYSABRI, we do feel that the TYSABRI launch, the one-year anniversary has progressed well. We are in the midst of driving the TYSABRI efficacy message worldwide. As you saw with the one-year TYSABRI anniversary press release on Monday morning, approximately 14,000 patients are on TYSABRI worldwide in the commercial or clinical trial setting. We had good successes during the quarter with European country launches. We received positive reimbursement decisions in France, Spain, and the UK; and all of these are important markets with large numbers of patients suffering from MS. We expect this will add in momentum on uptake in the second half of 2007. Our reinvestment, our investments in the pipeline are working well. We are very pleased with the pipeline progress in the second quarter. We now have 15 programs in Phase II or beyond. We have multiple programs starting patient enrollment during Q2. The CDP323 program, which is the oral VLA-4 inhibitor in collaboration with UCB for relapsing-remitting multiple sclerosis, began enrolling in Phase IIb programs. LT-beta receptor for rheumatoid arthritis began enrolling in Phase IIb programs. Evan will speak to that program briefly in a moment. BIIB014, which is small molecule program in collaboration with Vernalis for Parkinson's disease, began enrolling in Phase IIa programs. Our three registrational programs continued enrolling patients in Q2, following start of enrollment in Q1. Just to remind you, that's the BG-12 program, the oral program for relapsing-remitting multiple sclerosis; galiximab for non-Hodgkin's lymphoma and lumiliximab for chronic lymphocytic leukemia. Internal and external opportunities go hand-in-hand. A strong internal discovery organization is critical to attract and evaluate the best external opportunities and we have had success in both areas. We have made steady progress on the business development front over the past two years. We have executed on external growth with a number of smaller acquisitions and product collaborations that have large commercial potential. We look for opportunities to create significant step-up in shareholder value and go after innovation or large markets, where innovation has been lacking. We have been flexible in how we have structured and integrated the deals and by tying milestone payments to continued clinical success, we have been able to pay out less than $640 million in upfront payments for rights to over 10 molecules over the past two years and that's a very good track record. The most recent example is our agreement with Cardiokine on lixivaptan for heart failure announced in early July. Along with ADENTRI and Aviptadil, we expect that lixivaptan will help us establish a cardiopulmonary therapeutic area. And Evan will take you through some additional details on this in a moment. I have just two more comments in my introductory remarks. As Peter will discuss, we are updating guidance to reflect the impact of our first half performance and the results of the Dutch Auction tender offering. The year is playing out much as we planned and as we had previously indicated to you. The first half of the year, we invested strongly behind TYSABRI and the initiation of a number of Phase III and Phase II trials. As predicted, this reduces our overall operating margin. We expect the growth rate for earnings in the second half of the year to increase as our P&L benefits from the leverage of the SG&A investment made for TYSABRI. Finally, I would like to take few moments to thank Peter for his significant contributions to Biogen Idec over the years. We are sorry to see him go, but we wish him well with his future challenges at Merck. We are in the midst of evaluating our options for a CFO and I will update you on developments in the coming weeks. One of the things that great executives do is they recruit strong people and they build great teams, and Peter has done this for Biogen Idec. We will miss him, but he does leave behind a very strong organization. And I dearly like to thank him for his years of contribution here. With that, I will turn the call over to Bob Hamm.

Thanks, Jim. Let me start off by reminding everyone that we at Biogen Idec have the number-one prescribed MS therapy today in AVONEX. The product that has established a new level of efficacy, TYSABRI, which has been shown to delay the progression of disease and reduce relapses by two-thirds; and the best and broadest pipeline of MS compounds for the future. Looking back over the past 12 months, we have made significant progress as a franchise. 12 months ago, we had one product, the leading MS therapy in the world in AVONEX; tremendous uncertainty surrounding TYSABRI; and a young, but interesting pipeline. Since then, we have received approval for TYSABRI; responsibly launched TYSABRI in the US under one of the most comprehensive risk management plans in the industry, launched in about 20 other countries, received a positive opinion by NICE in UK confirming the benefit of the product, and most importantly, gave hope and an option to patients suffering from a serious, debilitating disease. Where one year ago, it was not clear that TYSABRI would even make it back to the market. This week we celebrate its one-year anniversary with approximately 14,000 patients on therapy, worldwide in the commercial and clinical settings, and over 1800 physicians is prescribing in the US alone. Momentum continues to build, with more and more patients starting therapy and more and more physicians prescribing every day. Additionally, AVONEX sales remain strong, with unit volume growing from Q1 to Q2. Combined market share of AVONEX and TYSABRI is approximately 40% in US. In fact, considering both products together, Biogen Idec is the only company that has gained US MS market share over the past six months. As Jim mentioned earlier, our global MS business exceeded 500 million in revenue this quarter, growing 19% year-over-year. Our pipeline has also matured in the past 12 months. We are the leader in the treatment of MS and we will continue to be the leader with our robust pipeline that has four products in Phase II or beyond, those being BG-12, RITUXAN 287, oral VLA4 and daclizumab. Let's move now to the TYSABRI summary. TYSABRI continues to build momentum. As of mid July, there are approximately 14,000 patients on therapy globally, including over 8600 in the US, over 4300 in the EU, and around 1,000 in clinical trials. We expect this number to continue to accelerate as the number of prescribing physicians continues to climb and the number of countries with reimbursement increases throughout the remainder of 2007. The 1800 physicians prescribing TYSABRI in the US today represent about 50% of MS unit volume. Significant opportunity remains with these physicians and those currently not prescribing. As you recall, I referenced through the majority of '06, we are focused on educating physicians on the TOUCH program and certifying infusion centers. Since then, our efforts have focused on providing the MS community with balanced information about the benefits of TYSABRI for appropriate patients. As we move into the second year of launch, our efforts will focus both on increasing the breadth and depth of prescribers. Each day, we hear remarkable stories about how TYSABRI has benefited patients. As more physicians have more experience with TYSABRI and share this experience with peers, momentum will continue to build. It is important to note the makeup of the TYSABRI patients in the US. Four out of five patients prescribed TYSABRI are new to the Biogen Idec franchise. One-third of TYSABRI patients are returning quitters and naive patients, which is expanding the market. As we have reported in previous earnings calls, glatiramer acetate continues to be the single largest source of TYSABRI patients year-to-date. The underlying market conditions that drive demand for TYSABRI have not changed. With over 200,000 patients being treated for MS today in the US and many thousands more, who have abandoned treatment for various reasons, there remains broad interest by physicians and patients who are impressed by TYSABRI's efficacy and convenient dosing regimen. That efficacy is illustrated by the reduction in relapses by two-thirds sustained over two years, as demonstrated in clinical trials, and the 13 infusions per year required of TYSABRI versus the more than 300 injections per year for some products. On the international front, more than 4300 patients are on therapy in Europe as of mid-July. Germany and Sweden continue to provide the majority of the patients being dosed with TYSABRI. As of the end of May, TYSABRI had attained 4% of German MS market share and almost 8% of Swedish market share. It is expected that momentum in international markets will continue to accelerate throughout the year, driven by France, which launched in early June. It is the second-largest market in Europe and rapidly becoming a more significant source of patients -- another significant source of patients. Two, the National Institute for Health and Clinical Excellence, NICE has recommended the use of TYSABRI to treat people with highly active relapsing-remitting MS, in recognition of its superior cost-benefit profile and efficacy benefits. This decision is expected to trigger reimbursement in UK sometime later in the year. TYSABRI is the first treatment for MS to be recommended for use by NICE. Finally, Spain was launched in June with reimbursement in place. Belgium, Czech Republic and Slovenia are among other countries launching. We also continue to work toward full reimbursement in several countries including Portugal, Finland, Norway, and Austria. The international rollout is expected to continue throughout '07 and into '08, with 21 European countries expect to have launched by the end of the year. In terms of AVONEX, AVONEX's performance was strong, as already noted, posting 8% growth year-over-year. AVONEX remains the most prescribed therapy worldwide and the number one therapy in US for more than 10 years. In US, AVONEX grew 3% year-over-year, while internationally AVONEX's revenue grew 14% in Q2 '07 year-over-year. The message is clear that with its long-term efficacy profile, including many years of experience in position and patient communities and the number one position, AVONEX remains the product to start with. Of course, for those who need more efficacy, TYSABRI is the appropriate choice. We are now one year into the relaunch of TYSABRI and have moved from the uncertainty of approval to the certainty of approximately 14,000 patients on therapy. At the same time, we remain the leader in MS. And I would like to remind everybody that we have the number one prescribed MS therapy today in AVEONEX. We have a product that has established a new level of efficacy in TYSABRI. We have the best and broadest pipeline of MS compounds for the future. We continue to recognize MS patients need more options, since they will have this disease for decades and it is unlikely only one drug will be appropriate over the course of their disease. From diagnosis to disease resolution, we're amassing the highest quality portfolio of compounds to address the unmet needs. I will now hand the call over to Dr. Evan Beckman, our Senior Vice President of Immunology, R&D.

Thank you, Bob. I will start with a quick introduction. My role at Biogen Idec is the head of our R&D efforts in immunology and emerging therapeutic areas such as cardiopulmonary. Today, I will provide just a snapshot of a few programs within this area of responsibility. I will only have time to discuss the few programs and a bit of detail. But as you recall, we provided a comprehensive review of the pipeline at our R&D day during the second quarter on May 17. The slides from the R&D day presentations are still available on the Biogen Idec website, and I encourage you to use them as a reference. First, let me start by providing a brief update on TYSABRI for Crohn's disease. In Europe, you likely saw last week that the CHMP has adopted a negative opinion on the approval of the application, and our press release indicating our plan to appeal the decision. We anticipate a decision on the appeal by first quarter 2008. In the US, an FDA public advisory committee meeting is scheduled for July 31st to discuss the application. We and our partner along look forward to discussing the benefits and the risks of the drug in Crohn's disease with regulators and the committee in a public forum later this month. In my remaining time, I will focus on just two of the programs I'm especially excited about that I believe provide a highlight of our internal and external pipeline efforts. Lixivaptan, in the process of being brought into a recent agreement with Cardiokine, which we expect to be a key part of our emerging cardiopulmonary therapeutic area, and the LT-beta fusion protein, a wholly-owned internally developed program now in late Phase II development. Let me start with lixivaptan. We announced a collaboration agreement with Cardiokine in early July. Upon completion of the agreement, we will bring in this late-stage product, lixivaptan, which is an oral selective V2 vasopressin receptor antagonist. We expect the initial indication will be for treating hyponatremia, a complication often associated with heart failure or one of several other disorders. We are excited about the program for a number of reasons. First, lixivaptan's clinical development plan calls for a start of Phase III programs in hyponatremia in heart failure patients by about the year's end. The Phase II data support and are robust moving into Phase III. The safety database includes well over 700 patients and volunteers to-date. Notably, there is a Special Protocol Assessment agreement in place, which means that if the trials are successful, the FDA has agreed that the protocols meet regulatory requirements for approval. We expect that the indication will be hyponatremia or a low serum sodium. There are an estimated 1.4 million patients with hyponatremia in the US. About 60% of the cases are associated with heart failure. The remainder associated with other serious disorders such as liver disease, cancer and SIADH. Because of the frequency of hyponatremia and the importance in heart failure, first trials will be in these patients. The unmet need here in congestive heart failure is significant. The mortality rate for heart failure is higher than most cancers, and heart failure is the most frequent cause of hospitalization. Hyponatremia and other renal complications frequently extend the length of hospital stays and increases readmissions. Therefore, congestive heart failure is one of the top three disorders in terms of the cost burden to the healthcare system. A large component is the over 1 million hospitalizations for heart failure in the US each year. About 35% of the heart failure patients present after hospitalization with low sodium or hyponatremia. But the initial acute market is sizable, it's growing, and addressable with a specialty hospital-based sales force. We believe lixivaptan has advantages over currently used therapies in heart failure, because it is an aquaretic or a therapy that removes free water without removing electrolytes such as potassium or sodium. Aquaretics have the potential to avoid limiting side effects used in heart failure, such as diuretics and side effects of positive inotropes, which are the current standards of care in heart failure. An aquaretic such as lixivaptan will also fit well with our current pipeline program, ADENTRI, which is a renal protectant also being developed for the treatment of heart failure. We believe lixivaptan also has advantages over competitor therapies because it's an oral therapy and it's selective for the V2-specific vasopressin receptor. That avoids some of the side effects of dual receptor antagonists. We expect the initial Phase III trial in over 600 heart failure patients with hyponatremia will take between two and three years to run. Primary endpoint here will be an increase in serum sodium. And we will provide more details as we get closer to the initiation of these studies. Along with ADENTRI and Aviptadil, we expect that lixivaptan will help us establish a cardiopulmonary therapeutic area. This new area now includes three Phase II programs the both lixivaptan and ADENTRI will be in Phase III development within the next six to 12 months. Let me move on to the LT-beta fusion protein. So, this is an example of a highly-promising internal reprogram with great potential. We have recently significantly accelerated the clinical development of LT-beta IG in rheumatoid arthritis. We have already started enrolling patients in a robust Phase IIb program during this quarter. We plan to enroll a total of 500 patients across two trials, which will generate randomized efficacy data in two key rheumatoid arthritis populations, the DMARD or methotrexate inadequate responders, and the TNF inadequate responders. The primary endpoint in both these trials will be the ACR 50 after three months; and patients will enroll in a safety extension trial after this. We expect that we will be able to establish the efficacy in these two key populations; establish the correct dose as well, which potentially is a once-a-month subcutaneous injection based on the activity that we saw in the Phase IIa trial. We will be able to talk more about that data that encouraged us to move forward rapidly after presentation of the Phase IIa trial data at a medical meeting. To briefly preview the data I will just tell you that we did examine, of course, the standard ACR components such as tender and swollen joint counts. It was a one-month study in over 50 patients. I can also say that we explored multiple doses and came away impressed with the potency of this drug. We have submitted abstracts to the ACR meeting in Boston in November and hope to be able to present the data there. So, in conclusion, I hope you came away with some of the same excitement we have for our growing pipeline. We continue to view 2007 as a year of executing on clinical trials, with 2008 a year of key data readout and decision points across all of the therapeutic areas in R&D. With that, I will hand the call over to Peter Kellogg.

Thank you, Evan. As I begin, please let me remind everyone that GAAP financials are provided in tables 1 and 2 of the earnings release; table 3 is a reconciliation of the GAAP to non-GAAP financial results. Now, before going through the financial review of Q2, I would like to highlight a few items that will have a meaningful impact on Biogen Idec's full-year financials. First, we completed our tender offer, which will impact both our shares outstanding as well as interest income and expense, but will be nicely accretive in 2007 and onward. Second, our effective tax rate has improved; and I will discuss that in further detail when I go through the P&L and come to the tax line. And third, the $50 million upfront payment associated with the anticipated Cardiokine deal will impact R&D in Q3. These items, particularly the share repurchase, make modeling our business a bit more complex. As a result, I will incorporate these changes into updated 2007 guidance at the end of this section to clarify their implications on our full-year financials. Let me begin with a quick recap of our $3 billion share repurchase. As you likely read in our recent press release, we were very pleased to announce that 56 million shares were repurchased at $53 per share for a total purchase of approximately $3 billion. Half of this repurchase was funded with cash, while the other half was funded with debt. This repurchase has allowed us to return cash to shareholders; take advantage of the recent share price; and optimize our capital structure while, as Jim said, maintaining investment-grade credit metrics and the capacity to continue to execute our external growth strategy. We are in the final stages of determining the optimal structure of the permanent debt, which will replace our temporary $1.5 billion bridge loan. We plan to announce the specifics regarding our final debt structure in the very near future. Now, let's move on to our financial review of Q2, starting with our GAAP to non-GAAP reconciliation in accordance with Reg G, as we have provided in table 3, which breaks out the reconciliation by major driver. The main items excluded from operating non-GAAP in Q2 were, first, we adjusted $61 million in purchase accounting charges for the amortization of intangibles. As a reminder, the intangibles are primarily related to the Biogen Idec merger. Second, we adjusted for $8 million in pretax employee stock option expenses. $5 million of this is an adjustment in the SG&A line, while the remaining $3 million is in R&D. And third, we had $16 million of tax impact on the items I just mentioned. Now as normal, I will move on to the non-GAAP P&L operating performance of Biogen Idec. We believe it is important to share this non-GAAP P&L with shareholders, since it better reflects the recurring economic characteristics of our business. It's how we manage the business internally and set operational goals, and forms the basis of our management incentive programs. So, in Q2, while we delivered $0.54 per share diluted EPS on the GAAP P&L, after the adjustments shown in table 3 our non-GAAP diluted EPS was $0.70 per share, which, as Jim mentioned, represents a 23% growth versus prior year. Now, let's move through the second quarter non-GAAP P&L results in a bit more detail. In the second quarter, our total revenue was $773 million or 17% revenue growth over the same period last year. This is the second consecutive quarter that we posted a 17% top-line growth rate. The key drivers of this year-over-year increase included the continued growth of the AVONEX business, as Bob reviewed; the reintroduction and increasing penetration of TYSABRI; and the growth of the RITUXAN franchise driven by label expansions in the oncology and rheumatoid arthritis markets. Biogen Idec's MS franchise overall grew by an impressive 19% since last year. With the launch TYSABRI we continue to grow the MS market as new patients and former quitters join the market; and Bob reviewed that earlier. Going through our product revenues, I would like to begin with AVONEX, the number one worldwide product in MS. In the second quarter, our worldwide AVONEX product sales were $462 million, an 8% increase over prior year. In the US, our Q2 AVONEX product sales were $270 million, a 3% increase over prior year. Now, given the TYSABRI launch, AVONEX's 3% year-over-year growth is quite an accomplishment and supports the overall growth of Biogen Idec's total MS franchise market share. Further, AVONEX continues to remain the most affordable ABCR therapy on the market. The international AVONEX business has grown very nicely year-over-year as well. Despite the TYSABRI launch and an increasing competitive landscape, our second-quarter international AVONEX product sales were $192 million, up 14% versus prior year. This increase was driven equally by volume, which is up nearly 8%, as well as favorable foreign exchange, which was up approximately 7.5%. In other words, AVONEX's Q2 sales growth in local currency increased over 6% versus prior year. Our international performance remains quite strong in both our direct markets as well as indirect markets. Year-over-year growth exceeded 6% in our direct markets and approached 13% in our indirect markets. In the second quarter, TYSABRI worldwide product sales were $48 million. And as Bob highlighted, TYSABRI continues to make strong progress in its launch worldwide. Given the recent reimbursement approval in France, the positive NICE recommendation in the UK, and the expected future approvals in other EU markets, we believe the international portion of the business in particular is well-positioned for accelerated growth. TYSABRI's financial highlights include US end-user or end-market TYSABRI sales totaled $47 million, which represents a 31% quarter-over-quarter increase. Just to remind you, Biogen Idec booked 22% of this amount. International end-user or end-market TYSABRI sales totaled $25 million, which is nearly double the prior quarter. And again to remind you, Biogen Idec booked this entire amount. Additionally, you will note that our collaboration profit-sharing line, which represents our payment of 50% of profits outside the US to Elan, is approximately breakeven in Q2. We expect this number to become positive next quarter and henceforth, grow very nicely reflecting the growing profitability of our international TYSABRI business. Moving to the other product revenue line, our Q2 ZEVALIN product sales were $4 million. And also in that line, our FUMADERM revenue was $5 million in Q2. Now, as I mentioned in our least earnings call, Biogen Idec took over distribution of FUMADERM in early May. At that point, we began shipping inventory ourselves and recognizing revenue again. This $5 million in Q2 represents approximately two months of revenue. We expect this number to increase in Q3 and onward, as we enjoy three full months of revenue each quarter. Now moving on to the RITUXAN collaboration revenues, which is referred to on the P&L as revenue from unconsolidated joint business. That was $231 million in the second quarter, an increase of 12% year-over-year. As we always discuss, this number has several elements. First, we receive our share of the US RITUXAN profits. As reported by our partner, Genentech, US RITUXAN sales were $582 million in the second quarter. And our Q2 profit share from that business was $153 million, up 7% versus prior year. Secondly, we receive royalty revenue on sales of rituximab outside the US, and in Q2 this was $52 million, up 32% versus prior year. Third, we were reimbursed for $15 million of selling and development costs incurred related to RITUXAN. Moving down to the royalty line, our Q2 royalties were $23 million. And now, I would like to move through the operating expense lines of our non-GAAP P&L. In the second quarter, cost of goods sold were $84 million or 11% of revenue. The R&D in the second quarter was $215 million, which is 28% of revenue, and notably it is a 39% year-over-year increase. Now, as Jim and Evan have already discussed, our pipeline continues to grow and advance really well, with many exciting programs under development, and I won't repeat all those points that have already been made here. But I would like to point out that during Q2, we announced a new collaboration with Cardiokine; but this was not closed, as it is subject to final Hart-Scott-Rodino approval. This transaction will incur a $50 million upfront payment to Cardiokine when it is closed. And we expect that this will occur and be booked in Q3. Our second-quarter SG&A was $198 million or 26% of revenue, and that's a 23% increase over prior year. This growth rate of 23% reflects the fact that we are in the midst of a major TYSABRI marketing effort in the US, as well as a country-by-country rollout in Europe. These launch activities have required us to significantly increase our SG&A investments over the last few quarters. However, we do not expect to see further increases in the next two quarters. This quarter's SG&A is expected to be a high-water mark for 2007, if you will. In Q2, our other income and expense was $32 million. Now, I will note that this includes a gain of $8 million from the sale of certain equity investments. In addition, there was no significant impact of our tender offer on OIE in Q2. On a go-forward basis, however, we do expect this line to be impacted by the loss of interest income on $1.5 billion in cash and the interest expense on $1.5 billion in debt. Our Q2 tax rate on non-GAAP P&L was 22%. Now, this is obviously lower than our Q2 tax rate in the prior year, mainly driven by three positive factors. First, the IRS has just completed its audit for the fiscal years 2003 and 2004, needing Biogen Idec to record an immediate $15 million reduction in tax liabilities in the second quarter. Second, we continue to benefit from an increasing ratio of international-to-US income as both TYSABRI and AVONEX performed very well overseas. Finally, we have incorporated the impact of our recent capital restructuring actions into the P&L. Overall, taking these changes into account, we expect our balance of year effective tax rate to be in the 28 to 30% range, and this should represent a new trend going forward. This brings us to our Q2 non-GAAP diluted EPS of $0.70 per share, which is, we have mentioned, is a 23% year-over-year increase. So, in summary, Q2 was a very strong quarter. Our top-line growth was at 17%. We continue to progress our pipeline both internally as well as via the continued execution of our external growth strategy; and Evan reviewed a few of those points today. Also, we have successfully executed our $3 billion tender offer to repurchase shares, which will be accretive for 2007 and onward. And at the bottom line, we delivered 23% non-GAAP EPS growth. Now, I would like to close with our revised 2007 non-GAAP P&L financial guidance. We now expect a higher annual revenue growth rate in the 16 to 18% range, and a bottom-line EPS growth rate in the 16 to 20% range. We expect similar financial margins for 2006 and 2007, except for R&D, which will be in the 28 to 30% of revenue range. This includes the anticipated $50 million milestone payment to Cardiokine in Q3. As I have mentioned previously and as Jim reviewed earlier, we delivered our P&L in 2007 due to the significant investments required by the TYSABRI launch and several milestones related to our pipeline buildup. However, with the continued growth and success of our franchises, we expect to see increasing leverage on these investments going forward. As I just mentioned, we estimate an effective tax rate for the balance of the year in the range of 28 to 30%. Fully diluted shares outstanding for the first half of the year were approximately 344 million shares. Due to the tender offer, this share count becomes far more important to get right; so let's go through some of the specifics. We fully expect -- or we expect a fully diluted share count to decrease to approximately 290 to 296 million shares for the second half of the year. On a full-year basis, I would like to remind everyone that a weighted average is used to determine the full-year share count. Thus, we estimate fully diluted shares outstanding for the full-year 2007 to average around 316 million to 322 million shares. However, as we roll into 2008, the full-year share count should remain closer to the 290 to 296 million shares range that we end the year at. As a result of all these updates, we expect a higher 2007 non-GAAP diluted EPS in the range of $2.60 to $2.70 per share. On a GAAP basis, this translates to 2007 diluted EPS in the range of $1.84 to $1.94, excluding any future acquisitions or other transactions. And that compares to GAAP EPS of $0.53 per share in 2006. Finally, we expect capital expenditures to be in the 250 to $300 million range this year. So to recap, we now expect 16 to 18% top-line revenue growth, and 16 to 20% bottom-line non-GAAP EPS growth, thus making 2007 a very strong financial year. In closing, as you know and as Jim mentioned, this is my last call as CFO of Biogen Idec. I have truly enjoyed my time here and I'm very proud of Biogen Idec's strong position and momentum today. Equally, I'm very appreciative of the finance team I leave behind, and I am confident that they are of the highest quality. I also appreciate the support that I received from throughout Biogen Idec and the investment community and have enjoyed working with all of you. Thank you very much. Now, I would like to hand the call over to Jim for his closing comments.

Thanks, Peter. So, in summary, Q2 was a very strong quarter. Very strong on the top-line, TYSABRI relaunch progressing very, very well. AVONEX continues to outperform -- I think most people's expectations, and I'm very proud of the group for doing that, and the RITUXAN business continues to grow nicely, especially with its, what I call, second life in autoimmune diseases. Furthermore, we have continued to progress both our internal and external pipeline activities. And our recent deal with Cardiokine emphasizes our commitment to our external growth strategy, as well as our focus on expanding into additional specialty therapeutic markets. And I'm also quite pleased with the extremely successful and expedited execution of our $3 billion leveraged share repurchase. So, I will turn it back to Elizabeth now and we will open it up for Q&A.

Thanks, Jim. So, operator, we are ready to queue up for Q&A, and I would just ask the participants on the call to limit yourselves to one question and reenter the queue to ask follow-up questions. Please state your name and your company affiliation. Thank you. Operator, we can take the first call.

(Operator Instructions). Our first question comes from Jim Birchenough with Lehman Brothers. Jim Birchenough - Lehman Brothers: Hi, guys. Just wondering if you could comment, perhaps, on new patient adds that we are seeing for TYSABRI in the US and Europe? It seems like the weekly trends for new patient adds are declining in the US and accelerating in Europe. Just wondering if you are seeing the same thing, particularly in the US, what is underlying that trend? Just as a follow-up, just wondering if you could comment on discontinuations from therapy that you're seeing with TYSABRI?

Bob, do you want to handle that?

Sure. Thanks, Jim. On the new patient adds, I don't see the lack of acceleration that you're referring to, frankly. I see a steady-state and occasional blips upward in recent weeks. So I am not sure what is behind that analysis. I think in terms of the slides, if you look at the time frames we're talking about there, you can derive different views. On the discontinuation, it is clear that we have some discontinuations. We think they are running about the same as they have been for a while in terms of how they look against other products. The primary reasons tend to be AEs that occur, that are reported, hypersensitivity reactions, these kinds of things. But so far, the members are well within what we expected.

Next question comes from the line of Mark Schoenebaum with Bear Stearns. Mark Schoenebaum - Bear Stearns: Maybe I could ask a question on TYSABRI for Crohn's. Can you guys maybe just clarify? I know I think you said Elan is kind of leading the effort here; but what exactly is the indication you are going to be looking for? Is it both induction and maintenance? And then I don't know if you guys have, I have been looking around, I can't find it. But do you have data specifically in TNF alpha failures? Will you have that data broken out for the committee on the 31st? Just a housekeeping question, just if you can give AVONEX share in the US and the EU.

Okay, so why don't I let Evan take the first part; and probably Peter has got the best data on the AVONEX share. So Evan, you want to take TYSABRI in Crohn's?

Sure, thanks, Jim. So in terms of the indication that we are looking at for TYSABRI in Crohn's, so we are looking for treatment of induction and maintenance in Crohn's disease. In terms of the patient populations, I think certainly that will be the focus of the discussion we have at the advisory committee, trying to define labeling language for an appropriate population. We have data. We have a large number of patients in the clinical development program for TYSABRI in Crohn's. And we do have a number of different populations, including people who have been on anti-TNF therapies in the past. Importantly, most of this data has been presented at medical meetings in the past. The subgroups that you can look at are all showing very much the same data across, no matter how you break out the populations. So efficacy is preserved in even these kind of more refractory patient populations compared to the overall population. Certainly what we see is [CEBA] rates go way down in the small refractory populations. So we have the data, we have plenty of patients, and the efficacy is preserved across different populations.

I think the last question was on the market shares in the MS market for the U.S. I am assuming, Mark, what you're referring to. So in the US basically AVONEX right now is in the mid-30s range, kind of holding very nicely. The TYSABRI share is coming up towards 4%, in the mid 3s, going up to 4. So we are kind of in the high 30s, approaching 40 overall in total. So that is the trend. I think what you clearly would see is that TYSABRI is picking up share as time goes on. AVONEX has been holding actually quite well, as Bob pointed out. And some of the other therapies are giving more than their proportionate share to the TYSABRI growth.

Next question comes from Bill Tanner with Leerink Swann. Bill Tanner - Leerink Swann: Thanks for taking the question. Just a question on the EMEA decision on TYSABRI for Crohn's. Evan, I know you just mentioned that you have got some subset data. I think that is going to be presented at the FDA advisory committee. Just curious if the European regulators saw that subset data. Then with an appeal, it seems like there's probably going to have to be the provision of additional data. So then is it contemplated or is it planned, I guess, that you guys would be submitting that data? Then I guess subsequently, if the FDA required additional clinical testing, what would be the bent, I guess, of the companies to do that?

I am going to let Evan maybe put some more detail behind this; but just to put a little context between the European decisions and the US process, they are a different process. You know, we can very well see different outcomes on the European process. It is our belief that they did not fully reflect on, in particular, some of the subset data, but the data overall. But remember, in Europe it is a question of their major control point is the label. In the US, the major control on distribution and use for TYSABRI will be through a risk management program. So I think that puts a very different context to those two different deliberations. Now maybe, Evan, you can add a couple of more detailed points.

I think, Jim actually put it pretty well. I'm not going to add too much to that. We believe in Europe that the data package, we believe that emphasis could be placed on certain aspects of the data in a way that perhaps wasn't done adequately during the initial review. So we plan to do that. I don't think, your other question was about follow-on trials, and I think it is really too preliminary to talk about that.

We continue to be quite interested in the GI indications overall. We think ultimately that will be a play for TYSABRI.

Next question comes from Michael Aberman with Credit Suisse. Michael Aberman - Credit Suisse: Great, thanks guys. Choosing my question, can you talk about the update on the battle with [DNA] over second-generation RITUXAN? I think we learned that you lost an injunction. They're moving forward with, at least the first part of an injunction. And they're moving forward pretty aggressively with that second generation. It's on how you are going to, how you're thinking about that program?

Yes, there is really not a lot to report since we have talked about this before. The dispute centers around decision-making rights. This is a partnership that goes essentially into perpetuity until there are no sales or profits left. So it is important to get alignment and agreement on how we're going to operate this thing going forward. As I have said previously, our expectation is that all these programs will continue to move forward. As they have. Some of the things in the arbitration are, we will just have to see how those things play out over time. I wouldn't read too much into those. Michael Aberman - Credit Suisse: I guess just a follow-up. The question is, once these things get started, if you lost the injunction phase of the arbitration, what is the point of continuing it on, if the trials are going to be pretty far along by the time the decision is made? I think they mentioned another 12 months at least until a decision. Is that right?

Well, I think I just illustrated the point. The point is around decision-making rights ultimately over the program. Remember, 287 is but one of the programs and one of the variants of these programs overall. So you know, I just wouldn't read too much into any little activity here. It is important that we get an agreement. If that will come via arbitration, so be it, on what the decision-making rights that are embedded in this contract and what is the proper interpretation of those. In the meantime, the programs will move forward. Michael Aberman - Credit Suisse: Thanks.

Next question comes from Geoff Meacham with J.P. Morgan Geoff Meacham - J.P. Morgan: Thanks for taking the question. A question for you on slide 11, your source of TYSABRI patients. Can you talk a little bit about what changes you have seen, say over the past six to 12 months on this? It just seems to me that the percent of patients switching from AVONEX to TYSABRI has maybe declined in the past few quarters.

This is Bob Hamm, Geoff. Yes, that is exactly right. The -- beginning in January and continuing, the AVONEX portion of switchers has declined. And Glatiramer acetate has remained, as I said, the number-one source for switching. And a naive and clear population has remained pretty constant throughout that period.

The big takeaway is if you look at five patients coming on to TYSABRI, four of them are new to the MS franchise for us. And so, we think that is a very strong position to be in. Geoff Meacham - J.P. Morgan: Just a follow-up to that. When you look at the O-US AVONEX growth on top of a TYSABRI rollout, does that suggest at all the MS market may be growing outside the US?

I think it is a little too early to tell, because all the countries are coming up. But clearly, we would expect that to happen based on the patient profiles coming in. Geoff Meacham - J.P. Morgan: All right. Thank you.

Your next question comes from May-Kin Ho with Goldman Sachs. May-Kin Ho - Goldman Sachs: Hi. I know it is early days yet, but if you look at the TYSABRI patients, how many percent of those are actually native patients at this point?

It has been steady at around 4%. May-Kin Ho - Goldman Sachs: 4% are native?

Yes. May-Kin Ho - Goldman Sachs: Less in Europe?

Europe it is much harder to tell, and it's only anecdotal information. Primarily what we know is that the early data we have was a predominance of patients coming in with switchers from the Rebif product and the Betaseron product, the high-dose interferons. May-Kin Ho - Goldman Sachs: Okay, thank you.

Welcome.

Your next question comes from Ian Somaiya with Thomas Weisel Partners. Ian Somaiya - Thomas Weisel Partners: Go ahead; I think you were planning to answer the question.

Yes, if you don't mind, I was just going to make the point that the source of that data that you see in that pie-chart comes from our risk map system. And so, we actually have patients come in, we know their history and where they come from; that is why we have such good data in the US whereas internationally, we don't have the exact same system in data collection. So, it is harder for Bob; he is using more [sample] examples as in a full market survey. I'm sorry, Ian, I didn't mean to interrupt you, though. Ian Somaiya - Thomas Weisel Partners: No, no, no. It is quite all right. So, I just had a question on the arbitration process. I know you have been fairly clear that the reason for the arbitration is decision-making rights. But I was wondering if the parties are -- both parties are amenable to some financial agreement just to get through this process, given the competition that is looming now?

Well, clearly, we both are aligned with the major objective, which is to move this franchise forward as aggressively as possible. And to that end, there are multiple programs embedded in this collaboration. That is both the excitement about the collaboration and the product, the CD20 overall; but it is also the challenge in trying to manage a broad collaboration like that. In terms of other discussions that might be going on, I wouldn't care to characterize any of those. I think both parties continue to be interested in working to a resolution so that we can focus on competition.

Your next question comes from Joel Sendek with Lazard. Joel Sendek - Lazard Capital Markets: Thanks, I have a question on lixivaptan. You mentioned the trial that you're going to do will take two to three years. I am wondering if that is the only trial that you will need under the SPA; or if there will be other trials that you would need or would contemplate other pivotal trials? Thanks.

Yes, hi, thanks. It is Evan. So, yes, of course, there are other trials, and we will give more details about those as we initiate them. But there will be several other trials. For approval in general, the standard is two well-controlled pivotal studies.

Your next question comes from Geoffrey Porges with Sanford Bernstein. Geoffrey Porges - Sanford Bernstein: Thanks very much for taking the question. Peter, congratulations and maybe a quick question for you before you head out the door. Peter, can you give us a little bit of sense of how the P&L could evolve, certainly over the balance of this year, and even looking a little further than that in your comments one thing you didn't talk about was gross margin. Could you give us a little bit of sense of how that might change? You have got currency in here, you have got a little bit of a change in your product mix. How do you think the gross margin outlook is likely to evolve, certainly through this year and as far as you can give us some commentary? Thanks.

Sure, thanks, Geoffrey. So, obviously, the gross margin on our P&L is a little tricky to think through, because obviously you have got very different elements up above in the revenue line. You have got AVONEX which has had a very traditional cost of sales I think you are all very familiar with. It's obviously in the high 80s. You have got the RITUXAN franchise business, which really has in a sense no cost of sales. So, as the RITUXAN franchise business performs well, you get a margin performance. Then you have TYSABRI, which I think as we have covered in the past, in the short-term is working through this year an inventory that, when it was in the position it was in when we suspended the product the first time it was actually written down. So, you see kind of a slightly enhanced gross margin for this year. I think if you -- we haven't really given guidance beyond 2007; so I wouldn't want to start doing that now. But the only comment I would just make is that I don't think that, with all those different blending events, you get dramatic changes in the gross margin over time. But I will leave that to guidance given in future years. But I don't think that anybody has ever kind of indicated that you'll see really dramatic changes and shifts in the gross margin level of the company. But clearly it has picked up a little bit as we have moved from last year to this year. Geoffrey Porges - Sanford Bernstein: That's very helpful. Congratulations again.

Thank you.

Your next question comes from George Farmer with Wachovia Securities. George Farmer - Wachovia Securities: Hi. Thanks for taking my question. Peter, maybe you can comment a little bit, thinking, going forward, how expense management can be maintained, particularly on the R&D front with so many new products maturing, which seems to be accelerating disproportionately to maybe general sales build? And how you think about that going forward?

Instead of Peter taking that, why don't I take it? George Farmer - Wachovia Securities: Okay, Jim.

I mean, how do we look at it? Obviously, we break the thing down program by program. But and we have a pretty good sense of what the forward committed spends are on these programs. There is always a little judgment that has to be applied to these things, because things happen in development. Either things take longer or in the case of LT-beta we decided to accelerate that program, and then things fail. So we are assuming there is going to be some of the typical attrition of our programs as they go through. What you are seeing by the end of this year is pretty much the full run rate for the Phase IIIs on those late-stage programs. I think if we continue to have good success and strong top-line growth, frankly we are going to be able to start to pull back a little bit on the R&D spending as a percentage of sales. The other thing to think about and it is hard to get underneath these numbers from the outside, I can appreciate that, but two other elements in that R&D line. One, we have pushed through there a fair number of milestones in the past couple of years. And so we embed those into the R&D line, and we regard those as an ongoing cost of business. I think that is the proper way to look at it, but nevertheless that is not an underlying run rate. So that would be the first point. And the second point is the leverage that we get on the manufacturing infrastructure as we have not only more products going through R&D, but more importantly that the utilization of the capacity increases as TYSABRI pulls through and other products start to make their way to the market. So you get some trade-off there. So there is some, frankly, there is some natural freeing of resource that moves from a couple of different directions that embedded in all those numbers. I'm pretty confident that we can not exceed this 30% number and move it down, and still move this entire pipeline forward. And we have organized our way and modeled it that way. I suppose there is one other outcome, which I would not consider necessarily bad, which is a lot of these things succeed and we are very excited and we decide we are going to invest a little higher for a couple of years. But that's going to be on the basis of strong Phase II and Phase III data, that you guys can all see and evaluate. That is another way to think about it, but we have not gotten that far yet. Although importantly, 2008, there is a lot of data that will flow out of the second half of 2008. So I think we are going to be pretty interested to start to see that data. George Farmer - Wachovia Securities: So Jim, when you mean 30%, you mean 30 R&D as a percentage of sales?

Yes. George Farmer - Wachovia Securities: Okay.

Yeah, don't anybody stick a 30% growth rate against. George Farmer - Wachovia Securities: Okay. Thanks very much.

Thanks for the clarity.

Your next question comes from Chris Raymond with Robert W. Baird & Company. Chris Raymond - Robert W. Baird & Company: Thanks for taking the question. Just a detail on AVONEX, I know you broke out the international revenue numbers in terms of volume growth versus foreign exchange. But I know you don't typically break out country by country. But is there any impact on the volume growth being driven by the Japan launch? Can you maybe quantify some of that?

I will take it because it's even a question I can answer. So it doesn't need -- so there is not a lot of volume that's coming out of Japan at this point in time. Japan as an MS market is 10, 12, may be 20,000 patients, total market there to get after. So it is only, we are in the very early days there. I don't think you can be, that's a couple decimal places over from our total volume at this point. I think, hopefully, in 2008 and beyond it will start to become a meaningful contributor on the revenue and profitability side. And its also, just to remind everybody, sort of a critical beachhead, where we have got a fully integrated organization there development and commercial now on the ground in Japan, which allows us to continue to hold on and capture the value of these other products as we bring them to the market. Chris Raymond - Robert W. Baird & Company: So the volume growth is predominantly Europe, then?

The volume growth is, yeah, that is Europe. Yeah, any of that ex-U.S. growth you are seeing is pretty much a Western European growth.

Operator, I think we can take one or two more questions.

Okay. Your question next question comes from Maged Shenouda with UBS. Maged Shenouda - UBS: Hi, thanks for taking my question. Just a follow-up on that ex-US AVONEX number, were there any excess inventory or stocking components to that?

Not that we are aware of, really. Certainly not in the direct markets, which is the large majority of the volume and on indirect markets, some of those markets work on a tender process; but that kind of comes in a regular cycle. So, you don't tend to see, per se, inventory blips in any big way. So likewise, because we didn't mention the US the inventory has been very steady through the channels that we track and so forth. So I don't think there is any notable inventory trends or impacts to any of these financials or any of the revenue results our AVONEX for Q2. Maged Shenouda - UBS: Okay, great. Thank you.

Sure.

Your last question comes from William Sargent with Banc of America Securities. William Sargent - Banc of America Securities: Hello. Thank you very much for taking my question. I had a real quick questions just on the run rate of physicians prescribing TYSABRI in the US, over a similar period from the last report, it looks like its slowed down a bit. I know on the last conference call, what you're hearing from the field is that two-year time point is where you might see some uptick in physicians prescribing. So I'm wondering if this is closer to what you see as a run rate over a similar timeframe moving forward for new physicians. And then also, if you could give us any guidances around the mean number of patients per physician and whether you have seen that declining or relatively staying the same as new physicians come on. Thank you.

So, thanks for the question, William. The mean number of physicians has continued to be over 100 per month, new prescribers being added to the mix. And that has been consistent all along. There is a minority of physicians out there that are concerned about the duration effect and want to wait a while. But apparently, more and more physicians are coming on each month. So that has become, of course over time less and less of a concern for most. In terms of the number of patients per physician, that continues to grow nicely from an early adopter standpoint to now. We have hundreds that are getting more and more patients on the drug. The key aspect psychologically I think here is that a lot of physicians want to put their toe in the water, so to speak, understand how they are going to manage the TOUCH program and what not. So they tend to take one patient through or two patients through to make sure they can handle that, especially at some of the smaller clinics. And as they gain that experience, as we said, we expect them to continue to find more and more patients to put on therapy over time.

Well, thank you, everyone. That was our last question. Thanks for joining us on this call today and enjoy the rest of your summer.

Ladies and gentlemen, this concludes the Biogen Idec second quarter 2007 earnings release conference call. You may now disconnect.