On October 25, 2022 Biogen Inc. (Nasdaq: BIIB) reported third quarter 2022 financial results.
"In the third quarter, Biogen made important progress toward building a foundation for growth while executing against our core business objectives," said Michel Vounatsos, Biogen’s Chief Executive Officer (Press release, Biogen, OCT 25, 2022, View Source [SID1234622347]). "We are excited about the topline results of the Clarity AD trial for lecanemab and believe this potential new therapy could provide a meaningful benefit for Alzheimer’s patients. We also continue to make progress toward delivering new impactful therapies for patients suffering from depression and SOD1 ALS, with important upcoming regulatory milestones."
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Third Quarter 2022 Operating Results
•Third quarter total revenue of $2,508 million decreased 10% versus the prior year at actual currency and 8% at constant currency*. Multiple sclerosis revenue, including royalties on sales of OCREVUS, of $1,621 million decreased 11% versus the prior year at actual currency and 9% at constant currency. SPINRAZA revenue of $431 million decreased 3% versus the prior year at actual currency and increased 2% at constant currency. Biosimilars revenue of $188 million decreased 7% versus the prior year at actual currency and 4% at constant currency. RITUXAN/GAZYVA profits attributable to Biogen were $136 million, a decrease of 10% versus the prior year.
•Third quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $1,135 million and $7.84, respectively. Third quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $691 million and $4.77, respectively. A reconciliation of GAAP to Non-GAAP financial measures can be found in Table 4 at the end of this news release.
•Third quarter GAAP and Non-GAAP cost of sales was $470 million, as compared to $512 million in the third quarter of 2021. Third quarter 2022 GAAP and Non-GAAP cost of sales includes approximately $12 million of idle capacity charges. Eisai Co., Ltd.’s (Eisai) share of these charges (approximately $5 million) is reflected in collaboration profit sharing.
•Third quarter GAAP and Non-GAAP R&D expense was $549 million, as compared to $702 million in the third quarter of 2021. Third quarter 2021 GAAP and Non-GAAP R&D expense included a $125 million upfront payment to InnoCare Pharma Limited and $39 million of estimated clinical trial close-out costs and manufacturing commitments due to suspended development of BIIB111 in choroideremia and BIIB112 in X-linked retinitis pigmentosa.
•Third quarter GAAP and Non-GAAP SG&A expense was $563 million and $562 million, respectively, as compared to $654 million and $651 million, respectively, in the third quarter of 2021. The decrease in SG&A expense was driven primarily by cost savings initiatives.
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•Third quarter GAAP and Non-GAAP collaboration profit sharing was a net expense of $45 million, primarily driven by net profit sharing expense related to Biogen’s collaboration with Samsung Bioepis.
•Third quarter GAAP gain of $504 million resulted from Biogen’s sale of its building at 125 Broadway as part of an initiative to optimize its office footprint in Cambridge, MA to align with reduced space requirements under hybrid work models.
•Third quarter GAAP other income was $56 million, primarily driven by net unrealized gains on strategic equity investments of $110 million, partially offset by net interest expense of $36 million. Third quarter Non-GAAP other expense was $55 million, primarily driven by interest expense.
•Third quarter GAAP and Non-GAAP effective tax rates were 17% and 16%, respectively.
* Percentage changes in revenue growth at constant currency are presented excluding the impact of changes in foreign currency exchange rates and hedging gains or losses. The current period’s foreign currency revenue values are converted into U.S. dollars using the average exchange rates from the prior period.
Financial Position
•Third quarter 2022 cash flow from operations was $661 million. Capital expenditures were $59 million, and free cash flow, defined as cash flow from operations less capital expenditures, was $602 million.
•As of September 30, 2022, Biogen had cash, cash equivalents, and marketable securities totaling $5,771 million and $6,279 million in total debt, resulting in net debt of $508 million.
•In the third quarter of 2022 Biogen repurchased approximately 1.2 million shares of the Company’s common stock for a total value of $250 million. As of September 30, 2022, there was $2,050 million remaining under the share repurchase program authorized in October 2020.
•For the third quarter of 2022 the Company’s weighted average diluted shares were 145 million.
Full Year 2022 Financial Guidance
For the full year 2022, Biogen is updating its revenue and Non-GAAP diluted EPS guidance ranges as follows:
Prior Guidance Updated Guidance
Total revenue $9.9 to $10.1 billion $10.0 to $10.15 billion
Non-GAAP diluted EPS $15.25 to $16.75 $16.50 to $17.15
The increase in full year 2022 revenue and Non-GAAP diluted EPS guidance is driven primarily by better-than-expected topline performance and continued cost management.
This guidance assumes continued declines in RITUXAN revenue due to biosimilar competition, as well as continued erosion of TECFIDERA revenue due to generic entry.
Non-GAAP R&D expense is expected to be between $2.2 billion and $2.3 billion, unchanged from prior guidance.
Non-GAAP SG&A expense is expected to be between $2.3 billion and $2.4 billion, unchanged from prior guidance.
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The Non-GAAP tax rate for 2022 is expected to be between 15.5% and 16.5%, unchanged from prior guidance.
This guidance assumes that foreign exchange rates as of September 30, 2022, will remain in effect for the remainder of the year, net of hedging activities.
This financial guidance does not include any impact from potential acquisitions or large business development transactions or pending and future litigation, as all are hard to predict, or any impact of potential tax or healthcare reform. Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2022 that could cause any of these assumptions to change and/or actual results to vary from this financial guidance.
Biogen does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking Non-GAAP financial measures to the most directly comparable GAAP reported financial measures because the Company is unable to predict with reasonable certainty the financial impact of items such as the transaction, integration, and certain other costs related to acquisitions or large business development transactions; unusual gains and losses; potential future asset impairments; gains and losses from our equity security investments; and the ultimate outcome of pending significant litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.
Alzheimer’s Disease Updates
•In the third quarter of 2022 Biogen and Eisai announced positive topline results from Eisai’s large global Phase 3 confirmatory Clarity AD clinical trial of lecanemab (BAN2401), an investigational anti-amyloid beta protofibril antibody for the treatment of mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease (collectively known as early Alzheimer’s disease) with confirmed presence of amyloid pathology in the brain. Lecanemab met the primary endpoint (CDR-SB: Clinical Dementia Rating Scale-Sum of Boxes) and all key secondary endpoints with highly statistically significant results. Eisai will discuss these data with regulatory authorities in the U.S., Japan, and Europe with the aim to file for traditional approval in the US and for marketing authorization applications in Japan and Europe by March 31, 2023. Additionally, Eisai will present the Clarity AD study results on November 29, 2022, at the Clinical Trials on Alzheimer’s Congress and intends to publish the findings in a peer-reviewed medical journal.
•In the third quarter of 2022 Eisai presented new findings at the Alzheimer’s Association International Conference on a subcutaneous formulation of lecanemab and the modeling simulation of the impact of ApoE4 genotype on the incidence of amyloid-related imaging abnormalities – edema/effusion, or ARIA-E, in subjects treated with lecanemab.
Recent Events
•In October 2022 Biogen and Sage Therapeutics presented analyses from the Phase 3 SKYLARK Study of zuranolone, an investigational, oral, once-daily, 14-day treatment in clinical development for adult patients with major depressive disorder (MDD) and postpartum depression (PPD) at the European College of Neuropsychopharmacology Congress (ECNP). The SKYLARK Study, evaluating zuranolone in PPD, achieved the primary and all key secondary endpoints, with study participants demonstrating rapid and significant improvements in depressive symptoms as early as Day 3 that were sustained through Day 45. Additional secondary endpoint data presented at ECNP showed that a higher proportion of participants in the zuranolone 50 mg arm achieved a HAMD-17 response (≥ 50% decrease from baseline HAMD-17 total score) as compared with the placebo arm at Days 3, 8, 15, 21, and 28 (p<0.05 at all time points). Data also showed that a higher proportion of participants in the zuranolone arm achieved HAMD-17 remission (HAMD-17 total score ≤ 7) than in the placebo arm from Day 3 through Day 45 (Day 45 p<0.05).
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•In October 2022 Biogen announced that the first patient was dosed in the global clinical study, AMETHYST, a Phase 2/3 study evaluating the efficacy and safety of litifilimab (also known as BIIB059), a first in-class, humanized IgG1 monoclonal antibody targeting blood dendritic cell antigen 2, as compared to placebo, in participants with cutaneous lupus erythematosus.
•On October 6, 2022, the Advocate General of the Court of Justice of the European Union (CJEU) issued a nonbinding advisory opinion in Biogen’s favor relating to regulatory data protection for TECFIDERA. This opinion recommends that the CJEU set aside the earlier judgement of the European General Court annulling the European Medicine Agency’s decision not to validate an application to market a generic version of TECFIDERA. If the Advocate General’s recommendation is adopted in the final CJEU decision, Biogen expects TECFIDERA to be entitled to the statutory period of market protection through at least February 2024.
•In October 2022 Biogen and Denali Therapeutics Inc. announced that dosing has commenced in the global Phase 3 LIGHTHOUSE study to evaluate the efficacy and safety profile of BIIB122 (DNL151), as compared to placebo in approximately 400 participants with Parkinson’s disease and a confirmed pathogenic mutation in the leucine-rich repeat kinase 2, or LRRK2, gene.
•In the third quarter of 2022 Biogen announced that the European Medicines Agency has accepted the Marketing Authorization Application for BIIB800, a biosimilar candidate referencing RoACTEMRA, an anti-interleukin-6 receptor monoclonal antibody.
•In the third quarter of 2022 Biogen announced that The New England Journal of Medicine published detailed results from the Phase 3 VALOR study and the combined analysis of VALOR and its open label extension study evaluating tofersen for the treatment of superoxide dismutase 1 amyotrophic lateral sclerosis, or SOD1 ALS. 12-month data showed that earlier initiation of tofersen slowed decline across critical measures of function and strength.
•In the third quarter of 2022 Biogen announced that the U.S. Food and Drug Administration (FDA) accepted a New Drug Application for tofersen and granted Priority Review. As part of the ongoing review, Biogen submitted responses to information requests by the FDA, which the FDA considered a Major Amendment to the application that will require additional time for review. As a result, the review period has been extended by three months and the Prescription Drug User Fee Act goal date has been updated from January 25, 2023 to April 25, 2023.
•In the third quarter of 2022 Biogen announced that The New England Journal of Medicine published two manuscripts detailing positive results from the company’s two-part Phase 2 LILAC study, which evaluated litifilimab, an investigational drug, in systemic lupus erythematosus and cutaneous lupus erythematosus.
•In the third quarter of 2022 Biogen and Sage Therapeutics announced new analyses from across the development program for zuranolone. An interim analysis from the ongoing open-label, longitudinal SHORELINE Study in MDD (30 mg cohort n=725, 50 mg cohort n=199) found the median time to the first repeat treatment course for those participants who responded to the initial 14-day treatment course (30 mg, n=489; 50 mg, n=146) was 135 days for the 30 mg cohort and 249 days for the 50 mg cohort. These data further support zuranolone as a potential episodic treatment for people with MDD.
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 25, 2022 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.