Analyst Conference Call Summary

biotechnology

conference date: April 24, 2024 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2024 (first quarter, Q1 2024)

Forward-looking statements

Overview: Revenue still declining y/y, but Zurzuvae and Leqembi sales beginning to ramp up. EPS up y/y on both GAAP and non-GAAP basis (that is a change).

Basic data (GAAP):

Revenues were $2.29 billion, down 4% sequentially from $2.39 billion and down 7% from $2.46 billion in the year-earlier quarter.

Net income $393 million, up 57% sequentially from $250 million and up 1% from $388 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $2.70, up 58% sequentially from $1.71 and up 1% from $2.67 year-earlier.

Guidance:

Reaffirmed prior 2024: non-GAAP EPS $15.00 to $16.00. Revenue y/y low to mid single digit % decline.

Conference Highlights:

CEO Christopher A. Viehbacher said: "We are starting 2024 with an increase in earnings per share and solid execution across our new product launches along with the realization of meaningful cost savings and margin improvement. We see momentum building at a steady pace for Leqembi. In particular, we were encouraged that Leqembi in-market revenue for the first quarter nearly tripled sequentially and we saw a significant build in month-to-month new patient starts in the first quarter. As the launch progresses and infrastructure develops, we continue to believe in the potential longer-term commercial opportunity in Alzheimer's disease. In rare disease, the U.S. launch of Skyclarys is advancing well and with the E.U. launch underway, we are beginning to realize the value of the Reata transaction. The uptake of Zurzuvae in postpartum depression and Qalsody in SOD-1 ALS, two areas of significant unmet need, has also been encouraging. With a renewed culture focused on purpose and performance, we are advancing toward our goal of returning to sustainable growth while creating enhanced value for patients and our shareholders." Fit for Growth program to achieve $1 billion gross, $800 million net cost savings by end of 2025. No acceptable offer for biosimilars business so far.

New growth drivers will be Leqembi, Skyclarys, Zurzuvae, and the ALS therapy Tofersen. Tecfidera won marketing protection in Europe until February 2025. Sold a priority review voucher for over $100 million in Q2.

Leqembi (lecanemab) for Alzheimer's patients increased by 2.5x sequentially. Now approved in China and Japan. Now has a trial for Leqembi in preclinical AD, AHEAD 3-045. Also working on a subcutaneous formulation, maintenance dosing OLE study, and preclinical AD. Ramp has significant startup hurdles like PET scans, and costs for clinics, so slower than otherwise. Underlaying demand is strong, some providers are now treating multiple patients. Expanding field force by 30%. Partnered with Eisai.

Biogen and Sage's Zurzuvae [zuranolone] for the treatment of major postpartum depression (PPD) was approved by the FDA in early August 2023. It was given a favorable DEA rating in November, 2023, allowing for sales to begin in December 2023, with main launch in Q1 2024. Enourmous unmet need, good media coverage. Half million potential patients per year. Early indications are strong. Making progress with payers, number of prescribers. Medicaid revues by state are ongoing. $12 million in revenue in Q1 2024.

Skyclarys (omaveloxolone) for Friedrich's ataxia launch is underway, 1,100 patients to date. On February 12, 2024 announced the European Commission granted its approval.

In the first half of 2024 expects Qalsody decision in the EU.

BIIB121 for Angelman Syndrome is in a Phase 1 study, with encouraging interim results. In a long term extension portion, with more data midyear 2024.

In Lupus has two potential therapies in Phase 3, Dapirolizumab Pegol and Litifilimab. Data expected mid 2024.

Biogen currently has four more biosimilar programs in development. Biogen is considering strategic options for its biosimilar business.

Non-GAAP net income was $535 million, up % sequentially from $na million and up 8% from $493 million year-earlier. Non-GAAP EPS diluted was $3.67, up % sequentially from $na and up 8% from $340 year-earlier.

Total product revenue was $1.71 billion, down 7% sequentially from $1.83 billion and down 3% from $1.76 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 $1.07 billion, up sequentially from $1.05 billion. $6.5 billion debt. $0 million was spent to repurchase shares. $553 million cash flow from operations. $46 million cap ex. $507 million free cash flow. Has paid down 75% of the $1 billion loan for Reata, will complete in Q2. Has received a Samsung payment in Q2.

GAAP Cost of sales was $542 million. R&D expense was $453 million. SG&A expense $582 million. Amortization of acquired intangible assets $78 million. Collaboration profit sharing income $66 million. Restructuring charges $12 million. Other expense $94 million. Total cost and expenses $1.83 billion. Leaving income from operations of $465 million. Income tax $71 million.

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

Q&A selective summary:

Leqembi foreign issues? Working with Eisai to offer sub-q version. Split strategy, rolling submission for maintainence. Optimizing dose. Trying to get Fast Track.

No plans for an acquisition this year, but we have a good balance sheet.

Skyclaris 2024 outlook? In U.S. now looking for the less-engaged patients. No competition, so expects to continue to penetrate this market. In Europe single payer system helps, uptake should be relatively fast, but nation by nation starting with Germany. Believes overall adding patients faster than discontinuations or lack of compliance issues. EU revenue as a whole more of a 2025 story.

Leqembi sales and marketing? Step-wise approach was planned. Was no point to a full field force when waiting for PET, etc. Now ready for expanded field force. It takes a lot of effort to get a site up and running, focus is on large IDNs and their satelite offices.

Sub-q Leqembi outcome not until 2026. 360 mg weekly maintenance, main issue would be immunogenicity. We already complete IV mainenance and filed in Q1 2024. Will discuss timing of IV to sub-q transition with FDA.

Lack of focus in presentation on R&D pipeline? Will have four data readouts mid year, will go back to that when we have data. Our go/no go decisions are going to be more disciplined. Also we plan to further diversify our pipeline. We are excited about out R&D pipeline.

Diversification away from MS? Not abandoning MS. But unmet need has narrowed. We have programs in development still. We have programs in ALS and Huntington's. We are overall well-placed in neurology, but development is slow and expensive. So we are looking to diversify into rare diseases and immunology.

Leqembi outlook? Believes now set up to expand number of physicians prescribing within IDNs. Physicians are clear on expectations of patients staying on product, and so far compliance is good.

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