Analyst Conference Call Summary

biotechnology

Biogen Inc.
BIIB

conference date: April 22, 2021 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2021 (first quarter, Q1 2021)


Forward-looking statements

Overview: Revenue decline mainly due to Tecfidera generic competition. Believes aducanumab FDA approval likely.

Basic data (GAAP):

Revenues were $2.69 billion, down 6% sequentially from $2.85 billion and down 24% from $2.53 billion in the year-earlier quarter.

Net income $410 million, up 15% sequentially from $358 million and down 71% from $1.40 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $2.69, up 16% sequentially from $2.32 and down 67% from $8.08 year-earlier.

Guidance:

Increased 2021 non-GAAP EPS guidance by $0.50 to $17.50 to $19.00, and continues to assume aducanumab will be approved by the FDA.

Conference Highlights:

CEO Michel Vounatsos said: "Our first quarter 2021 results were consistent with our expectations across MS, SMA, and biosimilars despite increased competition. The launch of Vumerity has continued to accelerate, providing a valuable new option for patients, and we continue to diligently manage operating expenses. We are pleased with our operational performance during the quarter, and we are increasing our earnings guidance for the full year. With an anticipated regulatory decision for aducanumab in the U.S. and a number of exciting pivotal readouts expected this year in depression, choroideremia, and ALS, we continue to believe that 2021 will be a transformative year for Biogen," Biosimlar revenue decreased mainly due to price competition.

The FDA approved intramuscular injection of Plegridy for multiple sclerosis on February 1, 2021. China approved Tecfidera for MS in April 2021.

Expects seven mid to late stage data readouts by the end of 2021. The Phase 3 readouts include tofersen for SOD1 ALS and BIIB111 for choroideremia.

Guidance also assumes continued erosion of Tecfidera revenue. Aducanumab spend is significant, but revenue is expected to ramp slowly if there is an approval.

n April 2021 Biogen and Eisai results from a Phase 2b proof-of-concept clinical trial of lecanemab (BAN2401) on reducing brain amyloid beta and clinical decline, in the journal Alzheimer's Research and Therapy. They announced that the lecanemab Clarity AD Phase 3 clinical trial completed enrollment in March 2021 with 1,795 symptomatic patients with early Alzheimer's disease.

In Q4 2020 Biogen entered into a collaboration with Sage Therapeutics jointly develop and commercialize zuranolone (SAGE-217) for major depressive disorder, postpartum depression, and other psychiatric disorders and SAGE-324 for essential tremor and other neurological disorders. Under the agreement, Biogen made an $875 million upfront payment and an equity investment of $650 million and may pay up to $1.6 billion in potential milestone payments, profit sharing and royalties.

In April 2021 Biogen and Sage announced positive Phase 2 results from BIIB124 for tremor.

In April 2021 Biogen entered a license agreement with Bio-Thera Solutions for BAT1806, a Phase 3 IL-6 receptor monoclonal antibody biosimilar to Actermra. Pending regulatory approval.

In April 2021 Tysabri by subcutaneous injection was approved by the EU for relapsing-remitting MS.

The FDA advisory committee recommended against approval of aducanumab. On January 29, 2021 the FDA PDUFA date of March 7, 2021 was moved to June 7, 2021 following submission of additional data and analysi. Applied in EU in October and Japan. 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. Data indicates aducanumab may slow the decline of patients. Started talking to payers about pricing the drug if it is approved. Preparing to file in EU, Brazil, Canada, Australia and Japan. Also expanding the Alzheimer's program with other potential therapies.

In Q4 2020 Biogen entered into a collaboration and licensing agreement with ViGeneron, to develop gene therapy products based on adeno-associated virus (AAV) vectors to treat inherited eye diseases. ViGeneron will be eligible to receive milestone payments as well as tiered royalties

The EMA in October 2020 accepted the MAA SB11, a proposed biosimilar referencing Lucentis (ranibizumab), an anti-VEGF (vascular endothelial growth factor), for retinal vascular disorders.

The FDA accepted for review the BLA for SB11, a biosimilar referencing Lucentis (ranibizumab). Ranibizumab is an anti-VEGF therapy for retinal vascular disorders.

In Q4 2020 Biogen entered into strategic collaboration with Atalanta, for new treatment options for neurodegenerative disease, to develop RNAi therapeutics for multiple CNS targets for neurodegenerative diseases, including Parkinson's disease and Alzheimer's disease.

Non-GAAP net income was $813 million, up 15% sequentially from $706 million and down 49% from $1.58 billion year-earlier. Non-GAAP EPS was $5.35, up 15% sequentially from $4.58 and down 42% from $9.14 year-earlier.

Total product revenue was $2.21 billion, down 4% sequentially from $2.30 billion and down 24% from $2.90 billion year-earlier. That excludes the Rituxan revenue, royalties and other revenue.

Therapy
Revenue in Millions
Q1 2021
Q3 2021
Q1 2020
y/y %
Tecfidera $479 $647 $1098 -56%
Vumerity 74 39 2 na%
Avonex + Plegridy 401 456 466 -14%
Tysabri 503 475 522 -4%
Fampyra 27 25 28 -4%
Spinraza 521 498 565 -8%
Benepali 122 118 134 -9%
Imraldi 58 54 62 -6%
Flixabi 26 26 24 8%
Fumaderm 3 3 3 0%
Rituxan*+Gazyva royalty 180 217 358 -50%
Ocrevus royalty 209 202 162 29%
Other** 93 132 109 15%

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

Cash and equivalents (including marketable securities) balance ended at $3.39 billion, down sequentially from $3.38 billion. $7.3 billion notes payable. $0.6 billion was spent to repurchase shares. $769 million cash flow from operations. $93 million cap ex. $676 million free cash flow. .

Cost of sales was $478 million. Research and development expense was $514 billion. Selling, general and administrative expense $595 million. Amortization of acquired intangible assets $98 million. Collaboration profit sharing $69 million. Gain on fair value remeasurement of contingent consideration $34 million. Total cost and expenses $1.72 billion. Leaving income from operations of $974 million. Other expense $507 million. Income taxes $44 million. Equity in loss of investee, $18 million.

In September 2020 first patient dosed in Phase 3 AHEAD 3-45 clinical study of BAN2401, an anti-amyloid beta antibody, in individuals with preclinical Alzheimer's disease, collaborating with Eisai.

BIIB 054 Phase 2 Parkinson's study did not meet goals, so is being discontinued as of Q1 2021.

BIIB067 completed Phase 3 trial enrollment for SOD1 ALS, with initial data due by the end of 2021.

BIIB059 Phase 2 results for CLE (cutaneous lupus erythematosus) produced positive results in Q2 2020. Plans Phase 3 study to launch in H1 2020.

BIIB122 Phase 1b met targets for Parkinson's in Q4 2020; late stage trial planned by end of 2021.

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

TMS-007 completed Phase 2 enrollment for acute ischemic stroke in Q4 2020.

See also the Biogen product pipeline. The entire pipeline includes 27 clinical programs.

Q&A summary:

Aducanumab reimbursement work with payers? We have been identifying initial sites for care. Diagnosis is a known bottlenet. Pleased with progress. Can see a path forward for reimbursement. Price has been discussed with stakeholders and economists.

Tecfidera litigation? We expect the result of the appeal any time. If successful, would be good, but no calculation of financial benefits yet. Cannot comment on agreements to continue to allow, if we win.

Spinraza ex-US? We see resiliance in core EU markets, and growth in emerging geographies. The end of the pandemic should help in the U.S. Competition is limited by its limited efficacy.

Tecfidera in China? Our second product approval in China. The demand is tremendous despite a lower incidence rate. We hope to expand our China portfolio over time. We have a team of over 200 people in China.

Stock repurchases? We are committed to the share repurchase program, we see it as an accretive investment. We do have less cash flow due to the Tecfidera revenue decline. We are also looking at business development opportunities.

Tau BIIB092? Roche negative results make us think it is tough to target Tau, but we have not seen our own results yet. We have 600 patients in the Phase 2 study, so results should be robust. We are also studying attacking Tau with BIIB080, which is antisense and may work better than antibodies, and 076.

Most of the Aria adverse events were mild, and most clinics have access to MRI, so monitoring for it for aducanumab should not be a problem.

Somnolence issue in BIIB124 for tremor? We may be able to manage that by managing the dose. It is all about benefit/risk, our mindset is to try to do better.

We continue to have regular meetings with the FDA on aducanumab and believe it is on track for a decision by the PDUFA date.

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Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes, which I am sharing with the investment community, not financial advice.

Copyright 2021 William P. Meyers