On July 21, 2016 Biogen Inc. (NASDAQ: BIIB) reported second quarter 2016 financial results, including:

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Total revenues of $2.9 billion, a 12% increase versus the same period in the prior year (Filing, Q2, Biogen, 2016, JUL 21, 2016, View Source [SID:1234513990]).
Growth was driven by increases in worldwide revenues from the Company’s multiple sclerosis (MS) and hemophilia businesses.
Foreign exchange negatively impacted total revenues by approximately $44 million compared to the second quarter of 2015, driven by changes in hedge results.

GAAP net income attributable to Biogen Inc. of $1.0 billion, a 13% increase versus the same quarter in the prior year.
GAAP diluted earnings per share (EPS) of $4.79, a 22% increase versus the same quarter in the prior year.
Non-GAAP net income attributable to Biogen Inc. of $1.1 billion, a 15% increase versus the same quarter in the prior year.
Non-GAAP diluted EPS of $5.21, a 23% increase versus the same quarter in the prior year.

(In millions, except per share amounts) Q2 ‘16 Q1 ‘16 Q2 ‘15 Q2 ‘16 v. Q1 ‘16 Q2 ‘16 v. Q2 ‘15
Total revenues $ 2,894 $ 2,727 $ 2,592 6% 12%

GAAP net income* $ 1,050 $ 971 $ 927 8% 13%
GAAP diluted EPS $ 4.79 $ 4.43 $ 3.93 8% 22%

Non-GAAP net income* $ 1,142 $ 1,049 $ 995 9% 15%
Non-GAAP diluted EPS $ 5.21 $ 4.79 $ 4.22 9% 23%
*Net income attributable to Biogen Inc.

A reconciliation of GAAP to Non-GAAP quarterly financial results can be found in Table 3 at the end of this release.

"During the second quarter we saw solid performance across our commercial business, as a growing number of patients benefited from our broad MS portfolio, hemophilia therapies, and recently launched biosimilar," said Chief Executive Officer George A. Scangos, Ph.D. "Revenue strength coupled with thoughtful management of expenses helped drive healthy earnings growth for the quarter. As a result, we have raised our financial guidance for the full year. Our Board has also authorized a $5 billion share repurchase program. We believe this allows us to return capital to shareholders, while leaving ample room for strategic flexibility."

"We also made important progress for patients with the U.S. and E.U. approvals of ZINBRYTATM and the E.U. approval of FLIXABI," Dr. Scangos continued. "And we are excited about our science and research as we shape a robust pipeline of novel candidates we believe could have a significant impact on neurological and related conditions. We continue to enroll two Phase 3 clinical trials for aducanumab in early Alzheimer’s disease; our collaboration partner Ionis Pharmaceuticals has completed enrollment in two Phase 3 studies of nusinersen in infants and children with spinal muscular atrophy; and we have announced an innovative gene therapy collaboration with the University of Pennsylvania focused on potential treatments targeting the central nervous system."

Revenue Highlights

(In millions) Q2 ‘16 Q1 ‘16 Q2 ‘15 Q2 ‘16 v. Q1 ‘16 Q2 ‘16 v. Q2 ‘15
Multiple Sclerosis:
TECFIDERA $ 987 $ 946 $ 883 4 % 12 %
Total Interferon $ 728 $ 670 $ 690 9 % 6 %
AVONEX $ 606 $ 564 $ 615 7 % (2 %)
PLEGRIDY $ 123 $ 106 $ 74 16 % 65 %
TYSABRI $ 497 $ 477 $ 463 4 % 7 %
FAMPYRATM $ 22 $ 20 $ 21 7 % 3 %

Hemophilia:
ELOCTATE $ 125 $ 108 $ 74 16 % 68 %
ALPROLIX $ 80 $ 75 $ 54 7 % 48 %

Other Product Revenues:
FUMADERMTM $ 12 $ 11 $ 13 4 % (7 %)
BENEPALI $ 15 $ 2 $ - NMF NMF

Total Product Revenues: $ 2,466 $ 2,309 $ 2,199 7 % 12 %

Anti-CD20 Revenues $ 349 $ 329 $ 338 6 % 3 %
Other Revenues $ 79 $ 88 $ 56 (10 %) 42 %

Total Revenues $ 2,894 $ 2,727 $ 2,592 6 % 12 %
Note: Numbers may not foot due to rounding

Expense Highlights

GAAP cost of sales was $370 million compared to $313 million in the first quarter of 2016 and $286 million in the second quarter of 2015.
Non-GAAP cost of sales was $354 million compared to $313 million in the first quarter of 2016 and $286 million in the second quarter of 2015.
GAAP and Non-GAAP R&D expense was $473 million compared to $437 million in the first quarter of 2016 and $491 million in the second quarter of 2015.
GAAP SG&A expense was $492 million compared to $497 million in the first quarter of 2016 and $492 million in the second quarter of 2015.
Non-GAAP SG&A expense was $489 million compared to $497 million in the first quarter of 2016 and $492 million in the second quarter of 2015.
Other Financial Highlights

For the second quarter of 2016, the Company’s weighted average diluted shares were 219 million.
As of June 30, 2016, Biogen had cash, cash equivalents and marketable securities totaling approximately $7.3 billion, and $6.5 billion in notes payable and other financing arrangements.
Share Repurchase Update

Biogen announced that its Board of Directors authorized a program to repurchase up to $5 billion of the Company’s common stock. Biogen currently expects that purchases will be executed over the next three years. This share repurchase program is in addition to the approximately 1.3 million shares remaining under Biogen’s February 2011 share repurchase program, which has been used principally to offset common stock issuances under the Company’s share-based compensation plans.

2016 Financial Guidance

Biogen updated its full year 2016 financial guidance. This guidance consists of the following components:

Revenue is expected to be approximately $11.2 to $11.4 billion.
GAAP and non-GAAP R&D expense is expected to be approximately 17% to 18% of total revenue.
GAAP and non-GAAP SG&A expense is expected to be approximately 16% to 17% of total revenue.
GAAP diluted EPS is expected to be between $18.10 and $18.40.
Non-GAAP diluted EPS is expected to be between $19.70 and $20.00.
This guidance includes contribution from our hemophilia business through the end of the year, as we now anticipate the spin-off to complete in early 2017. This guidance does not include any impact from potential acquisitions or late-stage business development transactions.

Biogen may incur charges, realize gains or experience other events in 2016 that could cause actual results to vary from this guidance.

CEO Transition

Biogen reported that George Scangos, its Chief Executive Officer, will be leaving the Company in the coming months after a successor has been identified. The Company will begin a search for his successor immediately. Dr. Scangos has been at Biogen for six years and has led the Company through a remarkable transformation. Under his leadership, Biogen’s revenues, earnings and stock price all have increased meaningfully and the Company has been transformed into a world-class biopharmaceutical company.

Stelios Papadopoulos, Chairman of the Biogen Board of Directors, remarked "George joined Biogen at a very challenging time. He re-organized operations and he oversaw the enrichment of our product pipeline and the launch of several products. In short, George did an outstanding job and I believe he is leaving the Company well positioned for success."

"The past six years have been quite successful," said Dr. Scangos. "We have introduced six new products onto the market, increased our earnings and revenues several fold, and transformed our R&D and commercial organizations to world-class levels, joining our already industry leading biologics manufacturing capabilities. We have brought several potentially transformative compounds into later stage clinical development and are in the process of adding to that pipeline even further."

"The Company has an exciting future and I am proud to have had a role in helping Biogen improve the lives of so many patients today and so many more in the future," added Dr. Scangos. "This is the right time for a new leader to take the reins and lead Biogen through its next stage of development, and I look forward to returning to the West coast to take on one more set of activities and spend more time with my family."

The Board will immediately begin a search for a replacement, and will consider both internal and external candidates. The Company expects the transition to occur over a period of a few months, and in the interim, Dr. Scangos will continue to serve as CEO.

Other Recent Events

In July 2016, the Marketing Authorization Application (MAA) for SB5, an adalimumab biosimilar candidate referencing Humira, was accepted for review by the European Medicines Agency (EMA). The MAA for SB5 is the third anti-TNF biosimilar candidate to be submitted to the EMA by Samsung Bioepis, the joint venture between Samsung BioLogics and Biogen. The approval of SB5 could make Biogen the first company to commercialize three anti-TNF biosimilar therapies in Europe.
In July 2016, the Roche Group announced that the Phase 3 GOYA study evaluating GAZYVA plus CHOP chemotherapy in people with previously untreated diffuse large B-cell lymphoma did not meet its primary endpoint of significantly reducing the risk of disease worsening or death (progression-free survival) compared to RITUXAN plus CHOP chemotherapy. In the U.S., Biogen shares operating profits and losses relating to GAZYVA with Genentech, a Roche Group company.
In July 2016, Biogen and AbbVie announced that the European Commission (EC) granted marketing authorization for ZINBRYTA for the treatment of adult patients with relapsing forms of MS (RMS). ZINBRYTA is a once-monthly, self-administered, subcutaneous treatment for RMS which has demonstrated superior efficacy to AVONEX (interferon beta-1a).
In June 2016, the EC approved a variation to the marketing authorization of TYSABRI, which extended its indication to include relapsing-remitting multiple sclerosis patients with highly active disease despite a full and adequate course of treatment with at least one disease modifying therapy. TYSABRI was previously only indicated for patients who had failed to respond to beta-interferon or glatiramer acetate in the European Union (EU). This follows recent EC approval for a new patient management plan including an updated risk algorithm based on JC virus antibody index values.
In June 2016, the Roche Group announced that the EMA has validated the company’s MAA of OCREVUS (ocrelizumab) for the treatment of RMS and primary progressive multiple sclerosis (PPMS) in the EU. The U.S. Food and Drug Administration (FDA) has also accepted for review Genentech’s Biologics License Application for OCREVUS for the treatment of RMS and PPMS, and has granted the application Priority Review Designation with a targeted action date of 28 December 2016. If approved for commercial sale, Biogen will receive tiered royalties on sales of OCREVUS.

In June 2016, Biogen announced the appointment of Paul McKenzie, Ph.D., as Executive Vice President, Pharmaceutical Operations & Technology. Dr. McKenzie was previously Senior Vice President of Global Biologics Manufacturing and Technical Operations. He replaces John Cox, who was named Chief Executive Officer of the new Biogen spin-off company.

In June 2016, Biogen reported top-line results from the Phase 2 SYNERGY study evaluating opicinumab (anti-LINGO-1), an investigational, fully human monoclonal antibody being developed as a potential neuroreparative therapy in people with RMS. In the study, opicinumab missed the primary and secondary endpoints. However, evidence of a clinical effect with a complex, unexpected dose-response was observed. The Company continues to analyze results to determine the appropriate next steps. The Company plans to present results from the SYNERGY study at the 32nd Congress of the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) in September 2016.

In June 2016, Biogen announced that aducanumab, its investigational treatment for early Alzheimer’s disease, was accepted into the PRIority MEdicines (PRIME) program of the EMA. PRIME aims to bring treatments to patients faster by enhancing the EMA’s support for the development of investigational medicines for diseases without available treatment or in need of better treatment options.

In May 2016, Samsung Bioepis, the joint venture between Biogen and Samsung BioLogics, received marketing authorization in the EU for FLIXABI, an infliximab biosimilar referencing Remicade. FLIXABI is the second anti-TNF biosimilar to be manufactured and commercialized by Biogen in the EU.

In May 2016, Biogen and AbbVie announced that the FDA approved ZINBRYTA, a new once-monthly, self-administered, subcutaneous treatment for RMS. According to the U.S. prescribing information, because of its safety profile, the use of ZINBRYTA should generally be reserved for patients who have had an inadequate response to two or more therapies indicated for the treatment of MS.

In May 2016, the Roche Group announced that the Phase 3 GALLIUM study met its primary endpoint early, demonstrating superior progression-free survival for GAZYVA compared to RITUXAN in people with previously untreated follicular lymphoma. Follicular lymphoma is the most common type of indolent (slow-growing) non-Hodgkin lymphoma (NHL) and accounts for approximately one in five cases of NHL. In the U.S., Biogen shares operating profits and losses relating to GAZYVA with Genentech, a Roche Group company.
In May 2016, Biogen announced a broad collaboration and alliance with the University of Pennsylvania to advance gene therapy and gene editing technologies, with a primary focus on the development of therapeutic approaches that target the eye, skeletal muscle and the central nervous system. Biogen will work with renowned gene therapy experts, Dr. James Wilson and Dr. Jean Bennett.

In May 2016, Swedish Orphan Biovitrum AB (publ) (Sobi) and Biogen announced that the EC approved ALPROLIX, an extended half-life recombinant factor IX Fc fusion protein therapy for the treatment of hemophilia B, in the EU.

In May 2016, Biogen announced its intent to spin off its hemophilia business as an independent, publicly traded company. The new company is expected to continue to commercialize ELOCTATE and ALPROLIX under Biogen’s existing collaboration agreement with Sobi, while continuing to engage in ongoing research and development activities to develop longer acting therapies utilizing XTEN technology, bispecific antibodies, and hemophilia-related gene therapy programs.

In April 2016, Biogen announced the appointment of Michael Ehlers, M.D., Ph.D. as Executive Vice President, Research and Development. Dr. Ehlers joins Biogen from Pfizer, where he served as Group Senior Vice President for BioTherapeutics R&D and Chief Scientific Officer for the company’s Neuroscience and Pain Research Unit.