Analyst Conference Call Summary

Biogen Inc.

conference date: January 27, 2016 @ 5:30 AM Pacific Time
for quarter ending: December 31, 2015 (fourth quarter, Q4 2015)

Forward-looking statements

Overview: Revenue growth, but GAAP net income lower y/y on increased expenses including $93.4 million in restructuring charges. Guiding to slow growth in 2016.

Basic data (GAAP):

Revenues were $2.84 billion, up 2% sequentially from $2.78 billion and up 8% from $2.64 billion in the year-earlier quarter.

Net income was $828.7 million, down 14% sequentially from $965.6 million and down 6% from $882.6 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $3.77, down 9% sequentially from $4.15 and up 1% from $3.74 year-earlier.


For the full year 2016 revenue of $11.1 to $11.3 billion revenue as Tecfidera growth slows. EPS $16.85 to $17.15 GAAP, $18.30 to $18.60 non-GAAP. Capital expense of $800 to $850 million.

Conference Highlights:

Full 2015 revenue was $10.8 billion up 11% over full 2014 over $9.7 billion, less than the prior target. Full 2015 non-GAAP EPS was $17.01.

Tecfidera sales continued to lead growth. But sales are expected to flatten in the U.S., with most new growth from Europe. In the quarter $785 million of revenue was from the U.S., with $208 million outside the U.S.

Most restructuring has now been completed. Benefited from the renewal of the R&D tax credit. Foreign exchange rates had a $35 million negative impact compared to year-earlier.

Eloctate for hemophilia A was approved in the European Union in November. Good data about joint bleeding were presented for Eloctate and Alprolix in December.

Biogen's infliximab biosimilar launch is expected in the first half of 2016. In January in partnership with Samsung Biologics, EU approval was granted for Benepali, an etanercept (Enbrel) biosimilar.

Zinbryta, jointly developed with AbbVie for relapsing multiple sclerosis, approval is expected in the first half of 2016.

Biogen is actively enrolling two global Phase 3 studies for aducanumab in early Alzheimer’s disease. Only safety data from the ongoing Phase 1b trial is likely to be released in 2016.

Biogen is now building a new biologics facility in Switzerland, which will account for much of the capital spend in 2016.

Non-GAAP net income was $995 billion, down about 0.5% sequentially from $1.0 billion and up 3% y/y. Non-GAAP EPS was $4.50, up slightly sequentially from $4.48 and up 10% y/y.

Total product revenue was $2.43 billion, up 2% sequentially from $2.39 billion and up 6% from $2.29 billion year-earlier.

Revenue in Millions
Q4 2015
Q3 2015
Q4 2014
y/y %

*unconsolidated joint business revenue

Royalty revenue was $10 million, up sequentially from $9.0 million and way down from $31 million year-earlier.

Corporate partner revenue was $69 million, up sequentially from $40.0 million, and up from $18 million year-earlier. This was mainly contract manufacturing.

Cash and equivalents (including marketable securities) balance ended at $6.2 billion. $6.5 billion notes payable and other debt.

Cost of sales was $331.8 million. Research and development expense was $541.7 million. Selling, general and administrative expense $583.0 million. Amortization of acquired intangible assets $96.6 million. Restructuring charges of $93.3 million. Fair value adjustment of contingent consideration $24.6 million gain. Total cost and expenses $1.671 billion. Leaving income from operations of $1,168.2 billion. Other expense $82.4 million. Income taxes $257. million. Income to non-controlling interests $2.9 million.

Alprolix is now under review in Europe.

Nusinersen (SMN-Rx) for spinal muscular atrophy in children generated encouraging Phase 2 open label study data. It is now in two Phase 3 studies, with data due in the first half of 2017. This is in partnership with Ionis Pharmaceuticals.

BAN2401 in Phase 2 for Alzheimer’s disease;

E2609 is in a phase Phase 2 study for Alzheimer’s disease.

Anti-LINGO is in a Phase 2 for multiple sclerosis with data likely midyear.

MT-1303, is a Phase 3 ready asset for inflammatory bowel disease.

Raxatrigine (CNV1014802) is a Phase 3 ready asset for trigeminal neuralgia and Phase 2b ready for lumbar radiculopathy.

In December a Phase 1/2 trial for BIIB067 (formerly IONIS-SOD1RX) was initiated for amyotrophic lateral sclerosis (ALS) in collaboration with Ionis Pharmaceuticals.

Biogen has preclinical programs for Parkinson's disease.

See also the Biogen product pipeline.

219 million shares were outstanding at the end of the year.


Initial metrics on new Tecfidera campaign? We will have some data in Q2. So far we are not seeing anything more than preliminary positive data.

Identification of early-stage Alzheimer's with PET scans? We need the patients close to the PET scans, and we screen for early, mild disease before the scan. We are working on getting the healthcare system to identify patients who need early treatment.

Lingo and E2609, hurdles to move forward? With Lingo in Phase 2 we are in novel territory for nerve repair. For E2609 base inhibitor we are mainly looking at safety because we are confident in the pharmaceutical effects we are seeing.

Tysabri dynamics? SPMS readout has not resulted in discernable change.

As far as acquisitions, clearly it is becoming harder for small companies to raise money, which is favorable to our licensing efforts.

Tecfidera price and volume model in U.S. for 2016? We expect stable demand in the U.S., with no price increase in remainder of the year.

The Lingo trial is about 80 patients per arm. We are looking for improvements, or slowing of progression. There are a lot of exploratory endpoints for the trial, given its novelty. We are looking for meaningful clinical impact. It is an undefined bar, not a low bar.

SNNRX data? Type 1 SMA data will be compared to natural history, which is tricky. Our confidence is growing. Median survival for children without therapy was 2 years. Children seem to be surviving and even making improvements, but we are cautious for now.

Plegridy launch dynamics? We are seeing a shift from conversion of Avonex patients to conversions from other interferons.

E2609 base inhibitor data this year? We will just have first cohort safety this year, but we do want a confirmation of pharmocodynamic effects. We have low expectations as far as efficacy, but it will result in a go or no go decision for Phase 3.

Share repurchases? We completed the prior $5 billion authorization. Cash flow generation remains robust. We are looking at how we will deploy capital in 2016.

Remyelenation, could you combine agents? Right now our thinking is to use a single agent, but combined with an anti-inflammatory drug.


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Copyright 2016 William P. Meyers