Analyst Conference Call Summary

biotechnology

conference date: October 30, 2024 @ 5:30 AM Pacific Time
for quarter ending: September 30, 2024 (third quarter, Q3 2024)

Forward-looking statements

Overview: Zurzuvae and Leqembi sales in slow ramp. Y/Y revenue decline continues. But increased guidance.

Basic data (GAAP):

Revenues were $2.47 billion, flat sequentially from $2.47 billion and down 3% from $2.53 billion in the year-earlier quarter.

Net income $389 million, down 33% sequentially from $584 million and up from negative $68 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $2.66, down 33% sequentially from $4.00 and up from negative $0.47 year-earlier.

Guidance:

Increased full year 2024 guidance to non-GAAP diluted EPS of $16.10 to $16.60. However, still expects a low-single digit y/y reveneu decline.

Conference Highlights:

CEO Christopher A. Viehbacher said: "In the third quarter Biogen made continued progress toward our goal of returning to sustainable growth. We continue to see momentum with ongoing product launches and we are increasingly excited about the potential of our pipeline. This quarter we had several significant positive developments in key areas of our late-stage pipeline which we believe underscore the potential value for both patients and shareholders. Importantly, the positive results for dapirolizumab pegol, as well as recent presentations of felzartamab data in IgAN, bolster our efforts to develop an industry-leading pipeline in immunology, where we are building upon data insights and increasing our capabilities to prepare for potential future launches." Cost basis has been reduced. Late stage pipeline has potential sales of $14 billion annually.

In Q3 2024 the EU upheld the Tecfidera patent expiring February 2028. But expects further challenges to the patent.

In Q3 2024 Biogen utilized $1.15 billion of cash to acquire HI-Bio (Human Immunology Biosciences), expanding its immunology portfolio and bolstering its late-stage pipeline with the addition of three potential phase 3 program starts, including nephropathy. Q3 2024 GAAP R&D expense included $43 million for the Hi-Bio acquisition.

In Q3 2024 Dapirolizumab pegol for systemic lupus erythmatosus (SLE) Phase 3 data was positive. Detailed dta in November at ACR. A second Phase 3 study will start this year.

Leqembi (lecanemab) for Alzheimer's patients global growth accelerated, with U.S. sales at $39 million, up sequentially from $30 million, and global at $67 million, up sequentially from $40 million. Not in table below because Biogen gets half of net after expenses. 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. Large infusion centers set up to meet growing demand. Expanding field force by 30%. Partnered with Eisai. EU rejected, but Eisai seeking further review. Also working on a subcutaneous product.

Biogen and Sage's Zurzuvae [zuranolone] for the treatment of major postpartum depression (PPD) main launch started 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 reviews by state are ongoing. In Q3 2024 sales exceeded expectations.

In Q3 2024 collaboration and profit sharing showed a net expense of $69 million due to Samsung Bioepis collaboration and Zurzuvae commercialization.

Felzartamab in AMR, IgAN, and PMN continues to make progress in Phase 2 trials. Phase 3 studies planned for 2025.

Biogen is looking for high-value external opportunities to add to the pipeline.

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

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

Non-GAAP net income was $596 million, down 23% sequentially from $771 million and down 6% from $636 million year-earlier. Non-GAAP EPS diluted was $4.08, down 23% sequentially from $5.28 and down 6% from $4.36 year-earlier.

Total product revenue was $1.77 billion, down 7% sequentially from $1.90 billion and down 2% from $1.81 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 $1.7 billion, down sequentially from $1.91 billion. $6.3 billion debt. $0 million was spent to repurchase shares. $936 million cash flow from operations. $35 million cap ex. $901 million free cash flow. $2.1 billion remains authorized for share repurchases.

GAAP Cost of sales was $ million. R&D expense was $ million. SG&A expense $ million. Amortization of acquired intangible assets $ million. Collaboration profit sharing income $ million. Restructuring charges $ million. Other income $ million. Total cost and expenses $ billion. Leaving income from operations of $ million. Income tax $ million.

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

Q&A selective summary:

Leqembi expanded commercial efforts? We've learned a lot since launch. Issues like PET scan reimbursement. Who is the right patient. Teams working well together on a very complicated launch. Physicians are working hard to make this happen. We add prescribers every week. Blood based diagnostics instead of PET scan would make it easier. Total prescribers were up 40% in Q3 v. Q2. Key barrier is still infrastructure. Full field force is now out there about a month, where present seeing more accelerated growth.

Subcutaneous Leqembi status? Filing should complete soon. Regulatory outcome on initiation with subq around Q1 2026.

Skyclarys revenue growth waiting on reimbursement approvals in individual EU nations. Normal for EU.

Our business is likely to grow between now and 2028, but not sufficient for us, so looking at assets to bring in that create value for shareholders along with more revenue. We have capacity for more debt due to our free cash flow.

CD19 CAR T competition in lupus? We watch the space. Dapi potential is exciting. SLE is chronic, heterogeneous. Many options will be required. The CAR T data sets are small and targetted, but logistics are difficult.

$14 billion potential pipeline details? BIIB80 has a lot of potential in Alzheimer's. A lot of researchers believe Tau is more significant than amyloid. Lupus could be a significant market. $14 billion is the top number, depends on clinical trial outcomes.

Spinraza remains strong because of its efficacy. We see switchbacks from competitors. But competition is intense. High-dose version could support growth, at least in U.S.

Neuroscience appetite? We still are investing in it. We have early stage neuro programs in Alzheimers, MS, Parkinsons. MS is really immunology. We could also expand in immunology or rare diseases.

Margins in 2025? We have improved margins, though not so much in Q3. Not guiding beyond 2024, but expect another $400 million in savings in 2025.

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