Analyst Conference Call Summary

biotechnology

conference date: February 3, 2022 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2021 (fourth quarter, Q4 2021)

Forward-looking statements

Overview: Hard to spin it as anything but a lousy quarter.

Basic data (GAAP):

Revenues were $2.73 billion, down 2% sequentially from $2.78 billion and down 4% from $2.85 billion in the year-earlier quarter.

Net income $368 million, up 12% sequentially from $329 million and up 3% from $358 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $2.50, up 13% sequentially from $2.22 and up 8% from $2.32 year-earlier.

Guidance:

Expects full 2022 revenue of $9.7 to $10.0 billion. Also expects lower margins due to generic competition. Non-GAAP R&D expense $2.2 to $2.3 billion. SGA expense $2.5 to $2.6 billion. Will continue share repurchases.

Conference Highlights:

CEO Michel Vounatsos said: "Biogen continued to execute well in the fourth quarter despite the challenges we have faced. We have introduced the first FDA approved treatment for Alzheimer’s disease in nearly 20 years, and we are engaging with the Centers for Medicare and Medicaid Services with the hope of finding a path for immediate patient access." Tecfidera revenue weakness due to competition was the leading reason for the y/y revenue decline. Working on cutting costs going forward.

Aduhelm (aducanumab) was approved by the FDA in Q2 2021 under its accelerated approval program, for Alzheimer's. The price was reduced to $28,200 in Q4 2022. Revenue in Q4 was $1 million. A final NCD decision is expected in April 2022, but the preliminary decision was negative. In July 2022 the FDA updated the label to emphasize the early disease stage emphasized in the clinical trials. The long-term Embark trial enrolled its final patient in July 2021. The new trial will start enrolling patients in May 2022 and take about four years; will aim at a higher percentage of black and hispanic patients than prior trials. In Q4 2021 additional data and analysis was presented supporting the drug's safety and effectiveness.

October 2021 topline results for tofersen (BIIB067) for SOD1 ALS were mixed, not meeting the primary endpoint. But there were positive trends in some endpoints, so Biogen will talk to regulators about a possible path to registration.

Biogen plans to sell its stake in Samsung Biologics for up to $2.3 billion. Close expected mid 2022. Biogen will continue to record some revenue and costs under the agreement.

In Q4 2021 Biogen opted to share profits with Genentech for a bispecific antibody currently in Phase 3 trials. Mosunetuzumab, is a CD20xCD3 T-cell engaging bispecific antibody in development for B-cell non-Hodgkin's lymphoma. Biogen will pay a $30 million option fee to Genentech and will pay approximately $20 million for a portion of the mosunetuzumab development expenses incurred during 2021. Biogen will have joint decision-making rights related to development and commercialization; Genentech will continue to lead strategy and implementation. Biogen will share in the operating profits and losses in the United States in the low to mid 30% range and is eligible to receive low single-digit royalties on sales outside the United States.

In 2022 expects 5 key data readouts plus 3 regulatory filings.

Biosimilars revenue increase 12% y/y [see table below]. After the Samsung stake sell Biogen plans to develop more biosimilars independently.

Biogen and Sage announced plan to submit an NDA to the FDA for zuranolone for the treatment of major depressive disorder (MDD) in 2022. An additional filing for postpartum depression (PPD) is anticipated in 2023. In October 2021 Sage and Biogen had announced new data from the LANDSCAPE and NEST clinical studies. Zuranolone for major depressive disorder reported positive Phase 3 data in Q4 2021 from the open-label Shoreline study.

In Q4 2021 Biogen exercised its option to obtain from Ionis a worldwide, license to develop and commercialize BIIB115, an investigational antisense oligonucleotide in development for SMA that may have the potential for extended dosing intervals as compared to SPINRAZA. Biogen paid Ionis a $60 million one-time upfront payment in the quarter.

In Q3 2021 Eisai initiated a rolling submission to the FDA of a BLA for lecanemab for the treatment of early Alzheimer's. Granted Fast Track in Q4 2021. Data was presented at CTAD in Q4 2021. Status is based on clinical, biomarker and safety data from the Phase 2b clinical trial in people with early AD and confirmed amyloid pathology.

Byooviz will enter the U.S. market in 2022. In Q3 2021 Byooviz (ranibizumab-nuna), a biosimilar referencing Lucentis (ranibizumab), was approved in the U.S., E.U., and U.K. In Q2 2021 BAT 1806, a biosimilar referencing Actemra reported positive Phase 3 data.

BIIB131 for Acute Ischemic Stroke produced positive Phase 2a results in Q4 2021.

Non-GAAP net income was $500 million, down 30% sequentially from $710 million but up from negative $161 million year-earlier. Non-GAAP EPS was $3.39, down 29% sequentially from $4.77 but up from negative $1.05 year-earlier.

Total product revenue was $2.19 billion, down 1% sequentially from $2.21 billion and down 5% from $2.30 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 $4.70 billion, up sequentially from $3.92 billion. $7.27 billion debt. $0 million was spent to repurchase shares. $838 million cash flow from operations. $52 million cap ex. $787 million free cash flow.

GAAP Cost of sales was $660 million. Research and development expense was $700 million. Selling, general and administrative expense $788 million. Amortization of acquired intangible assets $68 million. Collaboration profit sharing loss $67 million. Gain on fair value remeasurement of contingent consideration $2 million. Total cost and expenses $2.15 billion. Leaving income from operations of $587 million. Other expense $182 million. Income tax $443 million. Equity income, $18 million. Net loss attributable to noncontrolling interests, $389 million.

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

Full year 2021 revenue was $11.0 billion, GAAP net income $1.56 billion, EPS $10.40; non-GAAP net income $2.88 billion, EPS $19.22; cash flow from operations $3.64 billion, cap ex $258 million, free cash flow $3.38 billion.

Q&A summary:

Cash use given Samson deal? We are actively working on business development. But priority is to close the transaction, proceeds will come in gradually after that. We plan to continue our share buyback program.

Aduhelm CMS decision? We are looking to fulfill their science questions, both with current data and with future data development. Addressing safety questions. Looking for the path that is best for patients. We did meet with CMS recently, and will be submitting comments. We have been educating physicians, as many are confused. One week remains in comment period. Our budget plans depend on the final NCD.

Tecfidera risk? We believe there is possible generic entry in the first half of this year. We are launching Vumerity in 20 markets in the EU.

BAN2401? Clarity AD trial will read out in Q3 2022. Primary endpoint remains CDR sum of boxes.

Roche compound opt-in, moving into oncology? It is a continuation of the partnership with Genetech, not a shift of strategy.

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