Analyst Conference Call Summary

biotechnology

conference date: July 22, 2021 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2021 (second quarter, Q2 2021)

Forward-looking statements

Overview: Revenue was down 25% y/y as older drugs, primarilly Tecdidera, were hurt by generic competition.

Basic data (GAAP):

Revenues were $2.78 billion, up 3% sequentially from $2.69 billion and down 25% from $3.68 billion in the year-earlier quarter.

Net income $448 million, up 9% sequentially from $410 million and down 71% from $1.54 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $2.99, up 11% sequentially from $2.69 and down 69% from $9.59 year-earlier.

Guidance:

Updated 2021 revenue guidance upward to $10.65 to $10.85 billion, but left EPS unchannged at $17.50 to $19.00. Expects only modest Aduhelm revenue in 2021, with the ramp mainly in 2022.

Conference Highlights:

CEO Michel Vounatsos said: "Biogen has the market-leading portfolio of therapies for MS, has launched the first approved and market-leading therapy for SMA, and now has the first approved therapy to address a defining pathology of Alzheimer's disease. In addition, we recently reported positive data in depression and stroke, and we look forward to the expected Phase 3 data for tofersen, the first genetically-targeted potential therapy for ALS, for which we have begun offering individual compassionate use access." Will accelerate the Phase 4 Aduhelm study, and will publish Phase 3 data in an appropriate venue. Clear on the integrity of the FDA review process.

Aduhelm (aducanumab) was approved by the FDA in Q2 2021 under its accelerated approval program, for Alzheimer's. In July the FDA updated the label to emphasize the early disease stage emphasized in the clinical trials. A separate open letter on Aduhelm was released regarding controveries about the data and its approval by the FDA. Every day about 1000 people move from the early stage covered by the new label to being post-label. The Aduhelm ramp will take time, but 325 sites have indicated they will quickly move to making prescriptions. Reimbursement process is underway. The long-term Embark trial enrolled its final patient in July 2021. Aduhelm revenue in Q2 was $2 million.

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 now that there is an approval.

In April 2021 Biogen and Eisai published 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 Q2 2021 the Phase 3 trial of zuranolone reported positive data. A second Phase 3 zuranolone trial for major depressive disorder should report before year end 2021. 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.

In Q2 2021 BIIB131 (TMS-007) reported positive Phase 2a trial data for acute ischemic stroke.

In Q2 2021 BAT 1806, a biosimilar referencing Actemra reported positive Phase 3 data.

Biosimilar revenue in Q2 was impacted by pricing pressure and the pandemic.

Non-GAAP net income was $852 million, up 5% sequentially from $813 million and down 46% from $1.58 billion year-earlier. Non-GAAP EPS was $5.68, up 6% sequentially from $5.35 and down 42% from $9.85 year-earlier.

Total product revenue was $2.24 billion, up 1% sequentially from $2.21 billion and down 20% from $2.80 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 $3.97 billion, up sequentially from $3.39 billion. $7.27 billion debt. $450 million was spent to repurchase shares. $1.23 billion cash flow from operations. $72 million cap ex. $1.16 billion free cash flow.

Cost of sales was $460 million. Research and development expense was $585 million. Selling, general and administrative expense $637 million. Amortization of acquired intangible assets $604 million. Collaboration profit sharing gain $15 million. Gain on fair value remeasurement of contingent consideration $0.3 million. Total cost and expenses $2.29 billion. Leaving income from operations of $486 million. Other expense $96 million. Income tax benefit $409 million. Equity in loss of investee, $34 million.

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 2021.

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

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

Q&A summary:

Media assaults on Aduhelm? Whatever the motives of the controversy, it is the patients who will be denied help. Aduhelm is the first step. The early HIV drugs inspired similar controversy. The biomarker in Alzheimer's is often present before clinical symptoms. The amyloid hypothesis was already controversial, the anti-amyloid camp were dug in to their position. We want to bring the discussion back to the possible benefits and risks for the patients.

Early launch dynamics for Aduhelm including reimbursement, CMS? The controversy is not helpful, but we are making progress, if not as fast as we had previously assumed. We know there is patient interest across the nation, including from new patient referals. Most advanced sites are completing their PMT reviews. We are trying to help decision makers undestand the science and data. We see indication that denied patients will seek supportive sites. But building the infrastructure will require time and resources. Sites are ordering baseline MRIs. Orders are now coming in for lab partners. Some Medicare Advantage plans have already approved. Physicians are working hard to put in infrastructure to support patients.

BAN2401 early filing in 2021? Awarded breakthrough therapy designation, we will advance as rapidly as possible.

$2 million in sales in Q2? We do not have clear visibility, was $1.6 million, was likely mainly going into the channel.

NCD (Medicare national coverage determination), what to do with a negative scenario? 5 potential scenarios, including no coverage. Coverage to indictation; coverage with restrictions; coverage with evidence development; and left to Macs discretion. One the NCD decision is made it is the national rule.

Some Medicare Advantage plans have preapproved Aduhelm claims, but we do not have an example of an approved claim yet.

There is high interest in the CFS testing program. In the trial, 100% of patients were confirmed for amyloid plaques. There is no reimbursed test yet, so we are providing it. Access to amyloid PET is scant in some parts of the U.S. We are working on PET reimbursement through CMS.

Financial exposure of physicians pending reimbursement approval? That is a problem, until and NCD comes out, and even then when patients fall outside the criteria. This is common during drug ramps, for instance we saw it with Spinraza.

Known negative PMT reviews? 35% positive reviews, most of the rest no decision yet, stats change daily. We are disappointed that there are sites that specialize in Alzheimer's are making negative decisions. We have noted that in some cases the publicly announced reason for decisions have differed from the internal reasons. Some of the negative decisions will be reexamined, and we will provide more data when possible.

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