Analyst Conference Call Summary

Biogen Inc.

conference date: October 26, 2016 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2016 (third quarter, Q3 2016)

Forward-looking statements

Overview: Record revenue, Alheimer's candidate gets Fast Track.

Basic data (GAAP):

Revenues were $2.96 billion, up 2% sequentially from $2.89 billion and up 6% from $2.78 billion in the year-earlier quarter.

Net income was $1.03 billion, down 2% sequentially from $1.05 million and up 7% from $966 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $4.71, down 2% sequentially from $4.79 and up 13% from $4.15 year-earlier.


2016 guidance unchanged.

Conference Highlights:

“This quarter we saw solid performance from our leading multiple sclerosis business as an increasing number of patients globally are benefiting from our diverse portfolio of therapies,” said Chief Executive Officer George A. Scangos, Ph.D. “We are also excited to be offering patients a new treatment option with the introduction of Zinbryta, a new therapy for multiple sclerosis. In our biosimilars business, we are pleased to have launched two new treatments in Europe: Flixabi®, a biosimilar of infliximab, and Benepali®, a biosimilar of etanercept.”

Tecfidera for MS and Eloctate and Alprolix for hemophilia led sales growth. But Tecfidera had an inventory build in the channel of about $40 to $50 million. Avonex had a $10 million channel drawdown.

The U.S. MS market number of patients decreased 2% y/y, but Biogen remains the clear leader. Tysabri continues to add patients globally.

Biogen is actively enrolling two global Phase 3 studies for aducanumab in early Alzheimer’s disease and received fast track status from the FDA. Interim Data from the ongoing Phase 1b trial "efficacy and safety data were consistent with results previously reported." "We are encouraged by the growing body of data." Nature published an article on aducanumab. More data will be released at a meeting in December.

Nusinersen for spinal muscular atrophy (SMA) was filed for approval by the FDA and EMA based on interim data. Results from trials have been consistently positive.

Non-GAAP net income was $1.14 billion, flat sequentially from $1.14 million and up 9% from $1.04 million year-earlier. Non-GAAP EPS was $5.19, down slightly sequentially from $5.21 and up 16% from $4.48 year-earlier.

Total product revenue was $2.54 billion, up 3% sequentially from $2.47 billion and up 6% from $2.39 billion year-earlier. That excludes the Rituxan revenue and other revenue.

Revenue in Millions
Q3 2016
Q2 2016
Q3 2015
y/y %

*unconsolidated joint business revenue, Anti-CD20 products

Cash and equivalents (including marketable securities) balance ended at $7.4 billion (40% in U.S.), up sequentially from $7.3 billion. $6.5 billion notes payable and other debt. $349 million was spent to repurchase shares.

Cost of sales was $417 million. Research and development expense was $529 million. Selling, general and administrative expense $463 million. Amortization of acquired intangible assets $100 million. Restructuring charges of $12 million. Fair value adjustment of contingent consideration $6 million. Total cost and expenses $1.53 billion. Leaving income from operations of $1.43 billion. Other expense $58 million. Income taxes $337 million. Loss to non-controlling interests $3 million.

Cost of sales was up $25 million due to royalty payment on Avonex and Plegridy. R&D includes a $75 millino payment to Ionis for nusinersen. There was a $13 million charge in preparation for the spin-off of Bioverativ (Eloctate + Alprolix + hemophilia pipeline), which will trade as BIVV starting in early 2017.

In July an adalimumab biosimilar candidate referencing Humira marketing application was accepted for review in Europe, in partnership with Samsung Bioepis.

Opicinumab (anti-Lingo) had negative results, but Biogen has identified a subpopulation that had positive results.

Roche's Ocrevus is under review for MS in the U.S. and Europe. If approved, Biogen will receive tiered royalties.

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.

BAN2401 is in Phase 2 for Alzheimer’s disease.

E2609 is also in a Phase 2 study for Alzheimer’s disease. A Phase 3 trial is planned by partner Esai which would trigger a $50 million milestone payment on first patient dosing.

Decided not to pursue amucelumab, MT-1303, for inflammatory bowel diseases which was planned for starting Phase 3 studies in IBD and Crohn's disease in the second half of 2016.

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

BIIB059 data should be present soon for lupus.

See also the Biogen product pipeline.

Biogen also continues to look for outside opportunities.


Parallel trade issue with Tecfidera? We noticed it this quarter, but it goes back to last quarter. It is when a low-priced country's shipments end up in a high-priced country. It can happen with any product, and we try to manage it. We don't expect it to be a meaningful issue, but it could bounce around.

Remylenation for anti-Lingo b. BIIB 061? We are using the data to identify a target population. It could be similar for the two drugs. The population presents evidence of demylenation, so it makes sense they would get good results.

Nusinersen timeline? We have not heard back on whether we will get priority review, so we don't know the timeline yet in the U.S. or Europe. The 20,000 patient prevalence in U.S., Europe and Japan. We will seek a broad SMA label. If launched, we believe the impact on survival will increase the numbers over time. We don't know the timeline for approval, but we are ready to launch.

We don't know yet if the next Opicinumab trial will be a 2b or a Phase 3.

2017 pricing environment for MS? No comment except we are committed to profitable growth.

Rival therapy for Alzheimer's (solunazimab)? We look forward to seeing their data. They are approaching a different mechisms.

AveXis SMA therapy? Gene therapy is a possibility, both the competitor and our own program with UPenn. Nusinersen is set to launch first (AVXS-101 is in a Phase 1 study).

We are looking at nusinersen efficacy on Type 2 as well as Type1. The FDA will decide how broad the label is, and many of the studies have not completed.

MS volume decline trend in U.S. to continue? We had already seen the growth rate slow to single digits. The recent drop may be a result from some patients shifting from commercial to free. Don't know if it is an overall market trend. We believe we have further growth opportunity with Tecfidera. We want to increase our market share.

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Copyright 2016 William P. Meyers