On October 21, 2020 Biogen Inc. (Nasdaq: BIIB) reported third quarter 2020 financial results (Press release, Biogen, OCT 21, 2020, View Source [SID1234568728]).
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"In the third quarter, Biogen continued to execute on its strategy and delivered solid performance, although we began to face the launch of multiple generics of TECFIDERA in the U.S.," said Michel Vounatsos, Biogen’s Chief Executive Officer. "We look forward to participating in the aducanumab Advisory Committee meeting on November 6th, and we are excited about the prospect of aducanumab as a short- and long-term value creation opportunity. We have continued to allocate capital to create the opportunity for long-term shareholder value, including business development with our new collaboration in Parkinson’s disease."
Financial Results
•Third quarter total revenues were $3,376 million, a 6% decrease versus the third quarter of 2019, inclusive of a 1% unfavorable currency impact.
◦Multiple sclerosis (MS) revenues, including $272 million in royalties on sales of OCREVUS, decreased 4% versus the prior year to $2,257 million.
◦SPINRAZA revenues decreased 10% versus the prior year to $495 million.
◦Biosimilars revenues increased 13% versus the prior year to $208 million.
•Third quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $702 million and $4.46, respectively.
•Third quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $1,390 million and $8.84, respectively.
•GAAP R&D expenses in the third quarter of 2020 included a $601 million charge related to Biogen’s collaboration with Denali Therapeutics Inc. (Denali), which Biogen entered into in the third quarter of 2020 ($560 million upfront and a $41 million premium paid on Denali common stock purchased). These amounts are excluded from Non-GAAP R&D expense. Beginning in the third quarter of 2020, material upfront payments associated with significant collaboration and licensing arrangements are excluded from Non-GAAP R&D expense in order to better reflect the Company’s core operating performance. Year-to-date Non-GAAP results also reflect this change as the $125 million upfront payment related to the collaboration with Sangamo Therapeutics, Inc. (Sangamo) in the second quarter of 2020 has also now been excluded from Non-GAAP R&D expense.
Other Financial Highlights
•For the third quarter of 2020 GAAP and Non-GAAP net expense related to collaboration profit sharing was $73 million.
•For the third quarter of 2020 GAAP other expense was $129 million, primarily driven by net interest expense of $50 million and unrealized losses on strategic equity investments of $82 million. Non-GAAP other expense for the third quarter of 2020 was $46 million, primarily driven by net interest expense of $50 million partially offset by foreign exchange rate gains of $3 million.
•For the third quarter of 2020 the Company’s GAAP effective tax rate was approximately 25%, an increase from approximately 12% in the third quarter of 2019. This increase was primarily due to prior year favorability on Swiss tax reform as well as current year unfavorability, primarily driven by non-cash deferred tax adjustments related to TECFIDERA. For the third quarter of 2020 the Company’s Non-GAAP effective tax rate was approximately 18%, an increase from approximately 16% in the third quarter of 2019.
•In the third quarter of 2020 Biogen repurchased approximately 4.5 million shares of the Company’s common stock for a total value of approximately $1,250 million. The share repurchase program authorized in December 2019 was completed as of September 30, 2020.
•On October 20, 2020, Biogen’s Board of Directors authorized a program to repurchase up to $5.0 billion of the Company’s common stock (the 2020 Share Repurchase Program). The 2020 Share Repurchase Program does not have an expiration date. All shares repurchased under the 2020 Share Repurchase Program will be retired.
•As of September 30, 2020, Biogen had cash, cash equivalents, and marketable securities totaling $4,590 million and $7,425 million in notes payable. In the third quarter of 2020 the Company generated approximately $1,181 million in net cash flow from operations. Capital expenditures were
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$84 million in the third quarter of 2020, and free cash flow, defined as net cash flow from operations less capital expenditures, was $1,097 million.
•For the third quarter of 2020 the Company’s weighted average diluted shares were 157 million.
2020 Financial Guidance
Biogen is providing an update to its full year 2020 financial guidance, which was last updated in July 2020 and assumed no generic entry for TECFIDERA. During the third quarter of 2020, the Company began to experience the impact of multiple TECFIDERA generic entrants in the U.S., and this financial guidance assumes significant erosion of TECFIDERA in the fourth quarter of 2020, the pace of which is difficult to predict. As a result, Biogen currently expects:
•2020 Full Year Revenue to be approximately $13.2 billion to $13.4 billion, compared to the prior guidance range of $13.8 billion to $14.2 billion.
•2020 Full Year GAAP diluted EPS to be between $25.50 and $26.50, compared to the prior guidance range of $32.00 to $34.00.
•2020 Full Year Non-GAAP diluted EPS to be between $32.50 and $33.50, compared to the prior guidance range of $34.00 to $36.00. This range excludes the upfront payments associated with the Sangamo and Denali collaborations during the second and third quarters of 2020, respectively.
This financial guidance does not include potential impacts from new acquisitions or large business development transactions, as both have elements that are hard to predict. This financial guidance assumes that foreign exchange rates as of September 30, 2020, remain in effect for the remainder of the year.
Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2020 that could cause actual results to vary from this financial guidance.
Recent Events
•In October 2020 Biogen submitted the Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for the review of aducanumab, an investigational treatment for Alzheimer’s disease. This MAA is subject to validation of whether the EMA accepts the application for review, which Biogen plans to announce when notified. Biogen is collaborating with Eisai Co., Ltd. (Eisai) on the development of aducanumab.
•In October 2020 Biogen entered into a collaboration with Scribe Therapeutics (Scribe) to develop and commercialize CRISPR-based therapies for the potential treatment of amyotrophic lateral sclerosis (ALS). Under the collaboration, Scribe will receive a $15 million upfront payment and may be eligible to receive up to $400 million in milestones as well as tiered high single digit to sub-teen royalties.
•In October 2020 Samsung Bioepis Co., Ltd. and Biogen announced that the EMA accepted for review the MAA for SB11, a proposed biosimilar referencing LUCENTIS (ranibizumab). Ranibizumab is an anti-VEGF (vascular endothelial growth factor) for retinal vascular disorders, which are a leading cause of blindness.
•In October 2020 Biogen announced that the Phase 2 AFFINITY study of opicinumab (anti-LINGO) in MS did not meet its primary or secondary endpoints and that Biogen has discontinued development of opicinumab.
•In September 2020 the U.S. Food and Drug Administration (FDA) announced that an advisory committee meeting of the Peripheral and Central Nervous System Drugs Advisory Committee will be held virtually on November 6, 2020, to review data supporting the Biologics License Application (BLA) for aducanumab. Background material and the link to the online teleconference meeting room will be available at View Source Scroll down to the appropriate advisory committee meeting link.
•In September 2020 Biogen dosed the first patient in a Phase 1 study of BIIB105, an antisense oligonucleotide targeting ataxin-2, in ALS.
•In September 2020 the first patient was dosed in Phase 3 AHEAD 3-45 clinical study of BAN2401, an anti-amyloid beta (Aβ) antibody, in individuals with preclinical Alzheimer’s disease who have intermediate or elevated levels of amyloid in their brains. Biogen is collaborating with Eisai on the development of BAN2401.
•In September 2020 Biogen announced Healthy Climate, Healthy LivesTM, a groundbreaking $250 million, 20-year initiative to eliminate fossil fuels across its operations and collaborate with renowned institutions with the aim to improve health, especially for the world’s most vulnerable populations. Building on its long-standing commitment to corporate responsibility, Biogen’s goal is to eliminate its fossil fuel emissions by 2040 as well as be a catalyst for positive change by advancing the science around how fossil fuels impact human health and taking action to promote climate and health equity.
•In September 2020 Biogen presented new data underscoring the efficacy and safety of its broad portfolio of MS therapies at MSVirtual2020, the eighth joint meeting of the Americas Committee for Treatment and Research in Multiple Sclerosis and the European Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS-ECTRIMS). These presentations included new data further defining the effectiveness and safety profile of VUMERITY as well as new real-world MRI data suggesting that the effectiveness of extended interval dosing of TYSABRI is similar to the approved every-four-week dosing.
•In September 2020, also at MSVirtual2020, Biogen announced findings from a large, real-world study that provided insight into the clinical and health disparities that exist for people living with MS. Real-world data from the NARCRMS registry, a longitudinal database of more than 700 people living with MS in the U.S. and Canada, show that ethnic and racial disparities exist related to occupation, income status, MS-related disability, and type of treatment used.
•In August 2020 the first patient was dosed in the Phase 3 program for dapirolizumab pegol in patients with active systemic lupus erythematosus despite being treated by standard of care therapies. Dapirolizumab pegol is being developed in collaboration with UCB.
•In August 2020 the FDA accepted the BLA for aducanumab. The application was granted Priority Review, with a Prescription Drug User Fee Act (PDUFA) action date on March 7, 2021, and the FDA has stated that, if possible, it plans to act early on this application under an expedited review.
•In August 2020 Biogen and Denali announced a collaboration to co-develop and co-commercialize Denali’s small molecule inhibitors of leucine-rich repeat kinase 2 (LRRK2), expanding Biogen’s pipeline of potential therapies in Parkinson’s disease. Biogen also received rights to opt into two programs and a right of first negotiation for two additional programs, in each case for neurodegenerative diseases leveraging Denali’s Transport Vehicle technology platform to cross the blood-brain barrier. Under the agreements, Denali received a $560 million upfront payment and an equity investment of $465 million and may be eligible to receive up to $1.125 billion in potential milestone payments, profit sharing, and royalties. The share purchase agreement and collaboration agreement subsequently closed in September 2020 and October 2020, respectively.
Conference Call and Webcast
The Company’s earnings conference call for the third quarter will be broadcast via the internet at 8:00 a.m. ET on October 21, 2020, 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.