Analyst Conference Call Summary

biotechnology

conference date: April 22, 2020 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2020 (first quarter, Q1 2020)

Forward-looking statements

Overview: Revenue growth slowing, but adding to clinical-stage pipeline. Very rapid earning growth.

Basic data (GAAP):

Revenues were $3.53 billion, down 4% sequentially from $3.67 billion and up 1% from $3.49 billion in the year-earlier quarter.

Net income $1.40 billion, down 3% sequentially from $1.44 billion and down 1% from $1.41 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $8.08, flat sequentially from $8.08 and up 13% from $7.15 year-earlier.

Guidance:

Could be some impact going forward from COVID-19, particularly Tysabri sales, which depend of visits to doctors.

Conference Highlights:

CEO Michel Vounatsos said: "We delivered strong financial results in the first quarter, and we continued to develop and expand our pipeline, including making good progress toward the U.S. regulatory filing for aducanumab, as well as bolstering our efforts in gene therapy through a collaboration with Sangamo." Most of the 10 remaining mid to late stage data readouts are expected by the end of 2021. Remaining strong despite the coronavirus environment issues.

Strong revenue performers included Ocrevus royalties and biosimilars. Continued Vumerity launch. Other revenue dropped 63% y/y reflecting Q1 2019 sale of hemophilia inventory to Bioverativ. In Q1 2020 Biogen recognized a GAAP-only charge of $75 million related to its acquisition of BIIB118 from Pfizer. Other expense was $120 million, including $61 million in unrealized losses on investments, principally from a decrease in the fair value of the equity investment in Ionis.

Biogen started filing modules of a BLA for aducanumab. Planning to meet with the FDA this summer, then complete the filing in Q3 2020. Making preparations for expanded manufacturing. In March 2020 the first patient was dosed in the aducanumab re-dosing study, EMBARK, a global re-dosing clinical study designed to evaluate aducanumab in eligible Alzheimer's disease patients who were actively enrolled in prior aducanumab studies. "We remain optimistic about the prospect of bringing aducanumab to market." Biogen also continues to study its other Alzheimer's therapy candidates.

In January 2020 Biogen announced an agreement to acquire from Pfizer PF-05251749, a novel CNS-penetrant small molecule inhibitor of casein kinase 1 (CK1), which is in Phase 1. Targets are sundowning in Alzheimer's disease and irregular sleep wake rhythm disorder in Parkinson's disease. The purchase will include an upfront payment of $75 million with up to $635 million in potential additional development and commercialization milestone payments, as well as tiered royalties in the high single digits to sub-teens.

In December 2019 Biogen completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two new potential ophthalmology biosimilars, SB11 referencing Lucentis and SB15 referencing Eylea, in major markets worldwide, including the U.S., Canada, Europe, Japan, and Australia. Biogen acquired exclusive commercialization rights for its anti-TNF portfolio, including Benepali, Flixabi, and Imraldi, in China. Biogen also acquired an option to extend its existing commercial agreement with Samsung Bioepis for this antiTNF portfolio in Europe.

In December 2019 Biogen presented topline data from the aducanumab Phase 3 EMERGE and ENGAGE studies at the Clinical Trials on Alzheimer's Disease (CTAD) annual congress in San Diego, California. A regulatory filing is planned. Redosing study application has been submitted to the FDA.

In December 2019 Biogen announced positive top-line results from the Phase 2 LILAC study evaluating the efficacy and safety of BIIB059, a fully humanized IgG1 monoclonal antibody targeting blood dendritic cell antigen 2 (BDCA2) expressed on plasmacytoid dendritic cells, in patients with lupus. The safety and tolerability profile of BIIB059 supports its continued development, and Biogen plans to advance BIIB059 to Phase 3.

In Q2 2020 the collaboration between Biogen and Sangamo to develop gene regulation therapies for Alzheimer's disease, Parkinson's disease, neuromuscular disease, and other neurological diseases became effective. The companies will use Sangamos proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases. Upon closing Biogen paid Sangamo $225 million for Sangamo stock, approximately 24 million shares at $9.21 per share. Biogen will pay a $125 million license fee. In addition, Biogen may pay Sangamo up to $2.37 billion in milestone payments as well as tiered high single digit to sub-teen royalties.

Non-GAAP net income was $1.58 billion, up 6% sequentially from $1.49 billion and up 15% from $1.37 billion year-earlier. Non-GAAP EPS was $9.14, up 10% sequentially from $8.34 and up 31% from $6.98 year-earlier.

Total product revenue was $2.90 billion, down 1% sequentially from $2.93 billion and up 8% from $2.68 billion year-earlier. That excludes the Rituxan revenue, royalties and other revenue.

* unconsolidated joint business revenue, Anti-CD20 products
** mainly contract manufacturing

Cash and equivalents (including marketable securities) balance ended at $4.83 billion, down sequentially from $5.88 billion. $5.96 billion notes payable. $2.22 billion was spent to repurchase shares. $1.47 billion cash flow from operations.

Cost of sales was $454 million. Research and development expense was $476 million. Selling, general and administrative expense $570 million. Amortization of acquired intangible assets $72 million. Collaboration profit sharing $72 million. Acquired R&D $75 million. Other gains $5 million. Total cost and expenses $1.71 billion. Leaving income from operations of $1.82 billion. Other expense $121 million. Income taxes $292 million. Equity in loss of investee, $15 million.

In October 2019 Biogen dosed the first patient in a Phase 2 study of BIIB093 (glibenclamide IV) for brain contusion. Data from a Phase 2 study of BIIB092 for progressive suprnuclear palsy is expected in 2H 2019 and could support a regulatory filing.

In December 2019 Biogen entered into a collaboration agreement with CAMP4 Therapeutics for its CAMP4 Therapeutics Gene Circuitry Platform, with the aim of identifying how to dial up or down the expression of disease-associated genes within microglial cells. Biogen paid CAMP4 Therapeutics an upfront payment of $15 million

In Q1 2020 Biogen announced it is pursuing a process development and manufacturing collaboration with Vir Biotechnology, Inc., which is developing potential antibody therapies for COVID-19. Biogen, Broad Institute of MIT and Harvard, and Partners HealthCare announced a consortium that will build and share a COVID-19 biobank.

In December 2019 Biogen entered into a global license and collaboration agreement with Catalyst Biosciences for the development and commercialization of pegylated CB 2782, a preclinical anti-C3 protease, for the potential treatment of geographic atrophy associated dry age-related macular degeneration. Biogen paid Catalyst Biosciences an upfront payment of $15 million

In March 2020 Biogen decided to discontinue development of natalizumab for epilepsy.

An IND has been submitted and approved for BIIB105 for sporadic ALS, in April 2020.

In November 2019 Biogen completed enrollment of the Phase 3 STAR clinical study evaluating gene therapy BIIB111 for the potential treatment of CHM. CHM is a rare, degenerative, X-linked inherited retinal disorder that leads to blindness and currently has no approved treatments

In October 2019 the FDA issued a tentative approval for Vumerity (diroximel fumarate), a novel oral fumarate with a distinct chemical structure, for the treatment of relapsing forms of MS.

BIIB074 Phase 2 for small fiber neuropathy is enrolling. BIIB074 (vixotrigine)for trigeminal neuralgia Phase 3 initiation now planned.

Data from the Phase 1/2 studyof BIIB112 for XLRP ophthalmology study were positive, reported in Q2 2020. Now in Phase 2 study.

See also the Biogen product pipeline. The entire pipeline includes 27 clinical programs. 10 mid to late stage trial readouts are expected by the end of 2020.

Q&A summary:

Aducanumab delay, language? We are on track. We are engaging well with the FDA. It is taking a bit more time as we prioritize the quality of the submission. It is an unprecented data set, with 3,200 patients, multiple biomarkers. Timing is not easy to predict, and this is an unusual process. We now have an open BLA and have started to submit modules. Should not read too much else into this.

Has the FDA asked for any additional analyses? Nothing has come up in the data that changes our interpretation of the data, but we are constantly doing analyis and confering with the FDA.

Imputed completers? More FDA meetings should be interpreted as high interest by the FDA. Some members of our team did get COVID, which caused some delay. [no specific answers on imputed outcomes] We will communicate any changes. We have not plans for more public presentation before approval.

Talked about the complexity of the BLA and the FDA meetings.

Home infusion of Tysabri, aducanumab? Home infusions have been done for decades, it is easy to imagine that for aducanumab, if approved. But launching a new product in a COVID environment will be a challenge.

Submitting modules before pre-BLA meeting? There are non-clinical and clinical modules involved. In October we contemplated submitting modules as they were ready. The pre-BLA meeting is about the operational aspects of submission.

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