Analyst Conference Call Summary

Biogen Inc.

conference date: April 21, 2016 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2016 (first quarter, Q1 2016)

Forward-looking statements

Overview: Moderate revenue growth, but strong earnings growth.

Basic data (GAAP):

Revenues were $2.73 billion, down 4% sequentially from $2.84 billion and up 7% from $2.56 billion in the year-earlier quarter.

Net income was $971 million, up 17% sequentially from $832 million and up 18% from $823 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $4.43, up 18% sequentially from $3.77 and up 27% from $3.49 year-earlier.


None given.

Conference Highlights:

Revenue growth was driven by Tecfidera, Eloctate and Alprolix. Interferon sales declined. Foreign exchange had a $50 million negative impact y/y. Earnings growth was leveraged by lowering operating expense and a lower share count due to the buy back program. Q1 had typical seasonality issues.

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, and it recorded its first revenue in the quarter.

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 pleased with enrollment progress.

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 $1.05 billion, up 5% sequentially from $995 million and up 17% from $900 million year-earlier. Non-GAAP EPS was $4.79, up 6%y sequentially from $4.50 and up 25% from $3.82 year-earlier.

Total product revenue was $2.31 billion, down 5% sequentially from $2.43 billion and up 6% from $2.17 billion year-earlier. That excludes the Rituxan revenue and other revenue.

Revenue in Millions
Q1 2016
Q4 2015
Q1 2015
y/y %

*unconsolidated joint business revenue

Other revenue was $88 million, up sequentially from $79 million and up from $52 million year-earlier.

Cash and equivalents (including marketable securities) balance ended at $6.8 billion, with about 45% of that in the U.S. $6.5 billion notes payable and other debt.

Cost of sales was $313 million. Research and development expense was $437.3 million. Selling, general and administrative expense $497.3 million. Amortization of acquired intangible assets $88.8 million. Restructuring charges of $9.7 million. Fair value adjustment of contingent consideration $2.3 million gain. Total cost and expenses $1.35 billion. Leaving income from operations of $1.39 billion. Other expense $53 million. Income taxes $356 million. Income to non-controlling interests $1.7 million.

Alprolix received a positive CHMP review in Europe for hemophilia B.

"In April 2016, Samsung Bioepis, the joint venture between Biogen and Samsung BioLogics, received a positive opinion from the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) recommending that marketing authorization be granted for Flixabi, an infliximab biosimilar candidate referencing Remicade®. "

Nusinersen (SMN-Rx) for spinal muscular atrophy in children is now in two Phase 3 studies, one for children and one for infants, with data due in the first half of 2017. Enrollment is nearly complete. This is in partnership with Ionis Pharmaceuticals. Updated Phase 2 data will be presented at AAN this week.

BAN2401 in Phase 2 for Alzheimer’s disease;

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

Anti-LINGO (opicinumab) is in a Phase 2 for multiple sclerosis with data likely this year. A slide in the presentation showed primary and imaging endpoints.

MT-1303 for inflammatory bowel diseases should start Phase 3 studies in ulcerative colitis and Crohn's disease in the second half o 2016.

Raxatrigine (CNV1014802) is should start a Phase 3 trial for trigeminal neuralgia in 2016, and Phase 2b ready for sciatica also in 2016.

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

Gazyva (for which Biogen shares profits in U.S. with Roche) was approved by the FDA in February for follicular lymphoma in combination with bendamustine for Rituxan non-responders.

Biogen has preclinical programs for Parkinson's disease.

See also the Biogen product pipeline.

Biogen also continues to look for outside opportunities.


Tecfidera volume outside the U.S.? We are pretty pleased. We would like to do better in Germany, get to a 20% share. Pleased with early launches in southern Europe. U. K. was very strong for all our MS therapies.

Contracting changes effects on interferon? This is specific to Avonex and Plegridy in newly diagnosed patients. We don't think there has been a meaningful impact from contracting.

Asai collaboration on Alzheimer's, binding affinities and effects? BAN2401 binds the protofibril as well and ligands. We would expect it to reduce amyloid plaque. We don't know if it will do was well as aducanumab, which reduced plaque by 85% in one year. Competitor antibodies have not done that. We have seen so far that only a significant change in plaque, by one standard deviation, corresponds to a change in cognition.

Tecfidera Direct to Consumer (DTC) campaign? We were surprised by the low knowledge of Tecfidera, the ads were to increase awareness, and did, with results to be reported with Q2 results. We think Tecfidera experienced higher than normal discontinuation rates in 2015, but we see some signs that is past.

Rest of year? We can't predict currency exchange rate changes. R&D expense is choppy from business development activity, but that is hard to predict, if welcome. We are reaping the benefits of what we did in 2015 and will continue to focus on efficiencies.

Is your current R&D rate, a historic low, a long-term run rate? We are not de-emphasizing R&D. We continue to build and invest. We will spend what is necessary to develop our compounds, and as more go into Phase 3 expenses will rise. The one-quarter number partly reflects a lack of business development expense in the quarter.

Hemophilia market in general? Our products are doing well and gaining market share. We have not seen any impact on their trajectories yet from newly introduced, competitor long-acting products. We saw Biomarin's interesting but early data. Development of inhibitory antibodies remains a problem for some patients. 3 patients treated with Eloctate who had previously developed immune intolerance gained tolerance in 3 to 4 months, but we have to have more data before we can promote that.

Share buy backs? We are sitting on a high cash balance, but more than half is ex-U.S. Will look for a strategic deployment, if none is found could return it to shareholders, dependent on the price of Biogen stock to maximize intrinsic share value. Over a longer period of time we should generate enough cash to do both.

Is there going to be long term pricing pressure in the MS market, and your strategy? If you look at our pipeline many drugs are outside MS. Anti-Lingo could be transformational. We don't see anything near-term that would create pricing pressure, but of course there could be something in the 2020s.

Generic copaxone vs. interferons? Data suggests it is a small percentage so far and mainly impacts branded Copaxone.

Thoughts on amyloid beta plateau prior to symptoms? It is true plaque burden tends to plateau in the prodromal phase and certainly by the mild phase. We believe tau drives the progression beyond that. You can see that in the imaging studies. Preclinical data indicates a-beta pathology triggers tau pathology. In normal aging there is some localized tau, but in Alzheimer's it spreads more broadly. That is why we have some early programs for tau.

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