Analyst Conference Call Summary

conference date: October 24, 2017 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2017 (second quarter, Q3 2017)

Forward-looking statements

Overview: Strong revenue and earnings growth led by Spinraza.

Basic data (GAAP):

Revenues were $3.09 billion, up 0% sequentially from $3.08 billion and up 4% from $2.96 billion in the year-earlier quarter. Excluding the Bioverativ spinoff, revenue was up 13% y/y.

Net income was $1.23 billion, up 42% sequentially from $863 million and up 19% from $1.03 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $5.79, up 42% sequentially from $4.07 and up 23% from $4.71 year-earlier.

Guidance:

no change

Conference Highlights:

CEO Michel Vounatsos said: "Our multiple sclerosis portfolio demonstrated resilience in an increasingly competitive market, and we’re encouraged by the strength of Spinraza’s global launch. We had a solid third quarter, and over the balance of the year we anticipate seasonal pressure as well as increased spending as we invest behind our strategic priorities.”

“We believe that our new agreements with Eisai and Neurimmune will improve our long-term economics of aducanumab. We are pleased by Eisai’s decision to exercise their option on aducanumab, demonstrating their confidence in the asset. The region-based profit split with Eisai is designed to leverage each company’s respective geographic strengths and infrastructures.”

“We made important progress advancing our pipeline, including initiating new trials in Alzheimer’s disease and epilepsy and completing enrollment of studies in stroke and Parkinson’s disease. In the next 12 months, we expect data readouts from multiple programs across our core and emerging growth areas.”

Also "highly focused" on expanding portfolio through external opportunities.

Biogen continues actively enrolling two global Phase 3 studies for aducanumab in early Alzheimer’s disease. Enrollment should complete in 2018. Phase 1b data presented in July indicated it slowed decline in both cognitive and functional assessments. More data will be presented at a conference next week.

Spinraza (Nusinersen) for spinal muscular atrophy (SMA) uptake was strong. Expansion outside the U.S. remains a priority.

"In July 2017, the European Medicines Agency (EMA) announced that it has provisionally restricted the use of ZINBRYTA (daclizumab) to adult patients with highly active relapsing disease despite a full and adequate course of treatment with at least one disease modifying therapy (DMT) or with rapidly evolving severe relapsing MS who are unsuitable for treatment with other DMTs. This follows the initiation of an EMA review of ZINBRYTA, following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury."

Non-GAAP net income was $1.34 billion, up25 % sequentially from $1.07 billion and up 18% from $1.14 billion year-earlier. Non-GAAP EPS was $6.31, up 25% sequentially from $5.04 and up 22% from $6.19 year-earlier.

Total product revenue was $2.62 billion, down 1% sequentially from $2.64 billion and up 3% from $2,54 billion year-earlier. That excludes the Rituxan revenue and other revenue.

*unconsolidated joint business revenue, Anti-CD20 products
**spun off to Bioverativ in Q1

Cash and equivalents (including marketable securities) balance ended at $6.6 billion (20% in U.S.), up sequentially from $5.5 billion. $5.94 billion notes payable and other debt. $0 million was spent to repurchase shares.

Cost of sales was $370.0 million. Research and development expense was $446.4 million. Selling, general and administrative expense $433.8 million. Amortization of acquired intangible assets $108.9 million. Acquired in-process research and development of $0 million. Fair value adjustment of contingent consideration $30 million. Collaboration profit sharing $35.2 million. Total cost and expenses $1.42 billion. Leaving income from operations of $1.65 billion. Other expense $43.6 million. Income taxes $384.8 million.

Imraldi, an Adisimulab (Humira) biosimilar approved in Europe.

Opicinumab for relapsing MS started a phase 2b trial, Affinity, in October.

Natalizumab for drug resistant focal epilepsy started a Phase 2 study in October. For acute ischemic stroke the Phase 2b trial was completed in August, with data expected in 2018.

BG00011 for idiopathic pulmonary fibrosis had positive Phase 2a results, and will go to phase 2b in 2018.

Raxatrigine (CNV1014802) is should start a Phase 3 trial for trigeminal neuralgia in 2017, and Phase 2b ready for sciatica also.

BIIB054 for early Parkinson's disease completed Phase 1 enrollment in July.

See also the Biogen product pipeline. Plans to implement "a more robust product acquisition strategy" including both early and late stage assets.

Biogen aspires to becoming "the fastest growing large cap biotech." Believes can do this even if aducanumab does not get commercial approval.

Q&A:

Aducanumab implied valuation from deal? We are very pleased with the new agreements. The $150 million is based on the long-range operating plan. We have a long-term collaboration with Neurimmune.

How much aducanumab R&D spend? When Eisai contributes in 2019, a large part of the spend will still be ahead.

Spinraza numbers in U.S.? We had 75% patient growth. Q1 and earlier patients became fully recognized in Q3. So normalization. Working on how to treat patients with spine complications including fusion. Our peak sales objective has not changed.

Eisai saw the same data we have seen in making their decision for the partnership.

Spinraza sales overseas came from a variety of sources, but the main one was Germany. We believe that growth will occur as reimbursement becomes available. More than 500 patients in early access programs outside the U.S.

Price increases? We are pleased with the resilience of our MS portfolio. Market share is holding at 38%. No comment on our price policy.

Patient growth faster than revenue growth for Spinraza? 75% increase is end of Q2 to end of Q3. But 10% of patients had been on a loading dose in prior quarters, and end of quarter patients had not received the full set of doses. For Q4 the majority of growth will be from outside the U.S., but there is expected to be U.S. growth.

Our focus is on growing the pipeline, but we may still repurchase shares opportunistically.

OpenIcon Analyst Conference Summaries Main Page
Biogen Investor Relations page
Openicon Biogen main page

Search

More Analyst Conference Pages: