On April 24, 2019 Biogen Inc. (Nasdaq: BIIB) reported first quarter 2019 financial results (Press release, Biogen, APR 24, 2019, View Source [SID1234535356]).
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"Biogen delivered strong financial results in the first quarter driven by the solid operational performance of our MS, SMA, and biosimilars franchises," said Michel Vounatsos, Biogen’s chief executive officer. "However, we are deeply disappointed with the discontinuation of aducanumab for Alzheimer’s disease. We followed the science, and unfortunately the outcome was not as we had hoped. We continue to believe we can create value for patients and investors by capitalizing on opportunities in neuroscience, and we remain focused on allocating capital to the areas we believe have the highest potential return for shareholders."
Financial Results
First quarter total revenues were $3.5 billion, an 11% increase versus the first quarter of 2018.
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Multiple sclerosis (MS) revenues, including $112 million in royalties on the sales of OCREVUS, were relatively stable in the first quarter versus the prior year at $2.1 billion.
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Revenue growth was driven in part by the continued global launch of SPINRAZA, which contributed $518 million in revenues in the first quarter compared to $364 million in the first quarter of 2018.
Biosimilars revenues increased to $175 million compared to $128 million in the first quarter of 2018, driven by the launch of IMRALDITM.
Other revenues in the first quarter increased to $292 million compared to $164 million in the first quarter of 2018, primarily due to the sale of most of the remaining hemophilia inventory on hand to Bioverativ Inc.
First quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $1.4 billion and $7.15, respectively, compared to $1.2 billion and $5.54, respectively, in the first quarter of 2018.
First quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $1.4 billion and $6.98, respectively, compared to $1.3 billion and $6.05, respectively in the first quarter of 2018.
A reconciliation of GAAP to Non-GAAP quarterly financial results can be found in Table 3 at the end of this news release.
Mr. Vounatsos added, "We continued to make meaningful progress diversifying our pipeline. We are building depth in neuromuscular diseases and movement disorders, and our proposed acquisition of Nightstar Therapeutics would provide us with two potentially first-in-class mid- to late-stage clinical assets in specialty ophthalmology. By the end of 2020 we expect readouts across our clinical programs in MS, progressive supranuclear palsy, ALS, Parkinson’s disease, pain, cognitive impairment associated with schizophrenia, epilepsy, stroke, and lupus."
In the first quarter of 2019 channel inventory levels in the U.S. decreased by approximately $170 million for TECFIDERA, AVONEX, PLEGRIDY, and TYSABRI combined. This compares to an increase in inventory levels of approximately $105 million in the fourth quarter of 2018 and a decrease of approximately $140 million in the first quarter of 2018.
In the first quarter of 2019 SPINRAZA revenues comprised $223 million in sales in the U.S. and $295 million in sales outside the U.S. The number of commercial patients receiving SPINRAZA grew approximately 5% in the U.S. and approximately 24% outside the U.S. versus the fourth quarter of 2018. In the first quarter of 2019 Biogen recorded SPINRAZA revenues in over 40 countries.
R&D expense in the first quarter of 2019 included $39 million related to Biogen’s agreement with Skyhawk Therapeutics, Inc.
R&D expense in the first quarter of 2019 included approximately $45 million in net closeout costs for the Phase 3 studies of aducanumab in Alzheimer’s disease.
For the remainder of 2019 Biogen expects a reduction in operating expenses of approximately $125 million related to the discontinuation of aducanumab, with a net savings of approximately $80 million for the full year 2019.
Other Financial Highlights
In the first quarter of 2019 Biogen booked a pre-tax GAAP loss of $116 million related to its share purchase agreement with FUJIFILM Corporation (FUJIFILM) under which FUJIFILM will acquire all of the outstanding shares of Biogen’s subsidiary that owns its biologics manufacturing operations in Hillerød, Denmark.
For the first quarter of 2019 pre-tax GAAP other income was $357 million, including $376 million in net gains on investments, principally driven by an increase in the fair value of our equity investment in Ionis Pharmaceuticals, Inc. Non-GAAP other expense was $19 million.
For the first quarter of 2019 the Company’s effective GAAP tax rate was 23%, and the Company’s effective non-GAAP tax rate was 18%.
In the first quarter of 2019 Biogen repurchased approximately 2.4 million shares of the Company’s common stock for a total value of approximately $656 million. From April 1, 2019 through April 24, 2019, Biogen repurchased an additional approximately 2.1 million shares of the Company’s common stock at a cost of approximately $492 million.
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In the first quarter of 2019 Biogen’s Board of Directors authorized a program to repurchase up to $5.0 billion of the Company’s common stock. This is in addition to the approximately $1.0 billion remaining as of April 24, 2019, under the share repurchase program authorized in August 2018.
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As of March 31, 2019, Biogen had cash, cash equivalents, and marketable securities totaling approximately $5.3 billion, and approximately $5.9 billion in notes payable.
In the first quarter of 2019 the Company generated $1.5 billion in net cash flows from operations.
For the first quarter of 2019 the Company’s weighted average diluted shares were 197 million.
Recent Events
In April 2019 Biogen presented data on the rapidly progressive nature of spinal muscular atrophy (SMA) and the benefits of treatment with SPINRAZA at the Muscular Dystrophy Association (MDA) Clinical and Scientific Conference in Orlando, Florida (April 13-17, 2019). Presentations included data on the severity of disease progression in adults, adolescents, and older children, as well as data from the NURTURE study highlighting the benefits of pre-symptomatic treatment and findings on the role of neurofilament as a potential biomarker for predicting motor function in SMA.
In March 2019 the first patient was dosed in the Phase 3 VALOR study of BIIB067 (tofersen), an antisense oligonucleotide for amyotrophic lateral sclerosis (ALS) with superoxide dismutase 1 (SOD1) mutations. VALOR is a continuation of the Phase 1/2 single- and multiple-ascending dose study and is designed to assess the efficacy and safety of BIIB067 versus placebo. The primary endpoint of this study is an analysis based on the Amyotrophic Lateral Sclerosis Functional Rating Scale-Revised (ALSFRS-R) Score. Biogen is collaborating with regulators to further define the scope of the clinical data package required to support the registration of BIIB067.
In March 2019 Biogen and Eisai Co., Ltd. announced the decision to discontinue the global Phase 3 studies, ENGAGE and EMERGE, designed to evaluate the efficacy and safety of aducanumab in patients with mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease dementia. The decision to stop the studies was based on results of a futility analysis conducted by an independent data monitoring committee, which indicated the studies were unlikely to meet their primary endpoint upon completion. The recommendation to stop the studies was not based on safety concerns. Biogen has also decided not to initiate a Phase 3 secondary prevention study to evaluate whether early use of aducanumab can prevent or delay the clinical onset of Alzheimer’s disease at this time.
In March 2019 Biogen announced that it has entered into a share purchase agreement with FUJIFILM under which FUJIFILM will acquire all of the outstanding shares of Biogen’s subsidiary that owns its biologics manufacturing operations in Hillerød, Denmark, for up to $890 million in cash, subject to working capital adjustments and other contractual terms. Following the completion of the proposed transaction, FUJIFILM would use the Hillerød facility to produce commercial products for Biogen, such as TYSABRI, as well as other third-party products. The proposed transaction remains subject to customary closing conditions, including filings and clearances under the Danish Competition Act. The closing of the proposed transaction is expected to occur in the second half of 2019, after which Biogen will operate manufacturing facilities in Research Triangle Park, North Carolina and Solothurn, Switzerland, which Biogen expects to be operational by the end of 2020.
In March 2019 Biogen announced that it had entered into an agreement to acquire Nightstar Therapeutics plc (NST), a clinical-stage gene therapy company focused on adeno-associated virus treatments for inherited retinal disorders. Under the terms of the proposed acquisition, Biogen would pay NST shareholders $25.50 in cash for each issued and outstanding NST share. This offer represents a total transaction value of approximately $800 million on a fully diluted basis, after taking into account expected transaction expenses and anticipated cash acquired at closing. NST has two potentially first-in-class mid- to late-stage clinical assets as well as preclinical programs. NST’s lead asset NSR-REP1 is in Phase 3 development for choroideremia, a rare degenerative disorder that leads
to blindness and has no approved treatment options. The proposed acquisition of NST is planned to be funded through available cash and accounted for as an acquisition of a business. The closing of the proposed acquisition remains subject to customary closing conditions, including the approval by NST shareholders and the issuance of an order by the U.K. Court. Biogen expects to complete the acquisition by mid-year 2019.
In February 2019 Biogen announced that SPINRAZA was approved by the China National Medical Products Association for the treatment of 5q SMA, expanding the Company’s presence in China. Approximately 95% of all SMA cases are 5q SMA, making it the most common form of the disease. SPINRAZA is the first approved treatment in China for SMA. SPINRAZA will initially be available in China for self-paying patients as the Company works to secure provincial and national reimbursement.
In February 2019 Alkermes plc and Biogen announced that the U.S. Food and Drug Administration (FDA) had accepted for review the New Drug Application (NDA) for diroximel fumarate (BIIB098), a novel oral fumarate in development for the treatment of relapsing forms of MS. If approved, Biogen intends to market diroximel fumarate under the brand name VUMERITY, which has been conditionally accepted by the FDA and will be confirmed upon approval. The NDA has been assigned a PDUFA (Prescription Drug User Fee Act) target action date in the fourth quarter of 2019.
Conference Call and Webcast
The Company’s earnings conference call for the first quarter will be broadcast via the internet at 8:00 a.m. ET on April 24, 2019, and will be accessible through the Investors section of Biogen’s website, www.biogen.com. Supplemental information in the form of a slide presentation is also accessible at the same location on the internet and will be subsequently available on the website for at least one month.