On January 30, 2020 Biogen Inc. (Nasdaq: BIIB) reported full year and fourth quarter 2019 financial results (Press release, Biogen, JAN 30, 2020, View Source [SID1234553689]).
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"In 2019 Biogen demonstrated strong execution across all of our core business areas with resilience in MS, continued strong worldwide growth for SPINRAZA, and an expanded biosimilars business," said Michel Vounatsos, Biogen’s Chief Executive Officer. "In addition, as part of our expanded pipeline, we are excited about the prospects for aducanumab in Alzheimer’s disease and look forward to completing a regulatory filing in the U.S. as soon as possible."
Financial Results
Full year total revenues were $14,378 million, a 7% increase versus the prior year, driven by growth in all of the Company’s core business areas.
Full year multiple sclerosis (MS) revenues, including $688 million in royalties on the sales of OCREVUS, increased 2% versus the prior year to $9,217 million.◦
Full year SPINRAZA revenues increased 22% versus the prior year to $2,097 million.
Full year biosimilars revenues increased 35% to $738 million.
Full year GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $5,889 million and $31.42, respectively, compared to $4,431 million and $21.58, respectively, in the prior year.
Full year Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $6,291 million and $33.57, respectively, compared to $5,378 million and $26.20, respectively, in the prior year.
A reconciliation of GAAP to Non-GAAP full year and quarterly financial results can be found in Table 3 at the end of this news release.
Mr. Vounatsos added, "Our pipeline has grown and is maturing, as we added 7 new clinical programs in 2019 and expect 11 mid- to late-stage data readouts by the end of 2021. We look forward to multiple near-term opportunities for value creation, including in Alzheimer’s disease, ALS, stroke, lupus, ophthalmology, and biosimilars, as we aim to build a multi-franchise portfolio. Across all areas of investment, we remain focused on diligent capital allocation to maximize returns for our shareholders over the long term."
In the fourth quarter of 2019 channel inventory levels in the U.S. increased by approximately $135 million for TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, and TYSABRI combined. This compares to a decrease of approximately $30 million in the third quarter of 2019 and an increase of approximately $105 million in the fourth quarter of 2018.
In the fourth quarter of 2019 SPINRAZA revenues comprised $243 million in sales in the U.S. and $300 million in sales outside the U.S. The number of commercial patients receiving SPINRAZA grew approximately 2% in the U.S. and approximately 10% outside the U.S. versus the third quarter of 2019.
Note: Percent changes represented as favorable/(unfavorable)
R&D expense in the fourth quarter of 2019 included $63 million related to the transaction completed in December 2019 with Samsung Bioepis Co., Ltd. (Samsung Bioepis).
R&D expense in the fourth quarter of 2019 included $45 million related to the option exercise with Ionis Pharmaceuticals, Inc. (Ionis) to develop and commercialize BIIB080, an antisense oligonucleotide targeting tau, for Alzheimer’s disease and potentially other tauopathies.
R&D expense in the fourth quarter of 2019 included $30 million related to collaboration agreements with CAMP4 Therapeutics and Catalyst Biosciences, Inc.
SG&A expense in the fourth quarter of 2019 increased versus the third quarter of 2019 primarily due to increased commercial and medical investments as well as the timing of spend on general and administrative expense.
Other Financial Highlights
For 2019 GAAP other income was $83 million, and Non-GAAP other expense was $110 million. The difference between 2019 GAAP and Non-GAAP other income (expense) was primarily due to GAAP-only gains on strategic investments recognized in 2019. For the fourth quarter of 2019 GAAP other expense was $49 million, and Non-GAAP other expense was $50 million.
For 2019 the Company’s effective full year GAAP and Non-GAAP tax rates were 16.3% and 15.8%, respectively. For the fourth quarter of 2019 the Company’s effective GAAP and Non-GAAP tax rates were 16.0% and 16.1%, respectively.
Compared to the prior year, the Company’s effective GAAP and Non-GAAP tax rates for both the full year and fourth quarter of 2019 benefitted from a non-recurring change in the Company’s tax profile in 2019 and the sale of the remaining portion of higher taxed inventory in 2018 due to intercompany effects. Furthermore, compared to the prior year, the Company’s effective GAAP tax rates for both the full year and fourth quarter of 2019 also benefitted from the unfavorable effects of U.S. tax reform in 2018.
Throughout 2019 Biogen repurchased approximately 23.6 million shares of the Company’s common stock for a total value of $5,868 million, including approximately 7.7 million shares repurchased in the fourth quarter of 2019 for a total value of $2,093 million.
As of December 31, 2019, there was $1,279 million remaining under the share repurchase program authorized in March 2019.
In December 2019 Biogen’s Board of Directors authorized an additional program to repurchase up to $5,000 million of the Company’s common stock.
As of December 31, 2019, Biogen had cash, cash equivalents, and marketable securities totaling $5,884 million, and $5,955 million in notes payable and other financing arrangements.
The Company generated approximately $7,079 million in net cash flows from operations in 2019, including approximately $1,960 million in the fourth quarter of 2019.
For 2019 the Company’s full year weighted average diluted shares were 187 million. For the fourth quarter of 2019 the Company’s weighted average diluted shares were 178 million.
2020 Financial Guidance
Biogen also announced its full year 2020 financial guidance. This financial guidance consists of the following components:
Revenue is expected to be approximately $14.0 billion to $14.3 billion.
GAAP and Non-GAAP R&D expense is expected to be approximately 15% to 16% of total revenue.
GAAP and Non-GAAP SG&A expense is expected to be approximately 19.5% to 20.5% of total revenue.
GAAP and Non-GAAP tax rate is expected to be approximately 18% to 19%.
GAAP diluted EPS is expected to be between $29.50 and $31.50.
Non-GAAP diluted EPS is expected to be between $31.50 and $33.50.
This financial guidance does not include any impact from potential acquisitions or large business development transactions, as both are hard to predict. This financial guidance assumes no generic competition in the U.S. for TECFIDERA in 2020 and no change to foreign exchange rates. This financial guidance assumes additional commercial and R&D expenses related to aducanumab, closing of the proposed transaction with Pfizer Inc., and a stable share count.
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 January 2020 Biogen announced an agreement to acquire from Pfizer PF-05251749, a novel CNS-penetrant small molecule inhibitor of casein kinase 1 (CK1), for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases. In particular, Biogen plans to develop the Phase 1 asset for the treatment of sundowning in Alzheimer’s disease and irregular sleep wake rhythm disorder in Parkinson’s disease. The purchase will include an upfront payment of $75 million with up to $635 million in potential additional development and commercialization milestone payments, as well as tiered royalties in the high single digits to sub-teens. This transaction is subject to customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S., and is expected to close in the first quarter of 2020.
In 2019 Biogen added seven clinical programs to its pipeline, including BIIB111 (timrepigene emparvovec) for choroideremia (CHM), BIIB112 (RPGR gene therapy) for X-linked retinitis pigmentosa, BIIB091 (BTK inhibitor) for MS, BIIB094 (ION859) for Parkinson’s disease, BIIB100 (XPO1 inhibitor) for amyotrophic lateral sclerosis, BIIB093 (glibenclamide IV) for brain contusion, and SB11, a biosimilar referencing LUCENTIS.
In December 2019 Biogen entered into a collaboration agreement with CAMP4 Therapeutics. The collaboration will leverage CAMP4 Therapeutics’ Gene Circuitry PlatformTM with the aim of identifying how to dial up or down the expression of disease-associated genes within microglial cells – the primary immune cells of the central nervous system, which are implicated in many serious neurological and neurodegenerative diseases. Under the terms of the agreement, Biogen paid CAMP4 Therapeutics an upfront payment of $15 million.
In December 2019 Biogen entered into a global license and collaboration agreement with Catalyst Biosciences for the development and commercialization of pegylated CB 2782, a preclinical anti-C3 protease, for the potential treatment of geographic atrophy associated dry age-related macular degeneration. Under the terms of the agreement, Biogen paid Catalyst Biosciences an upfront payment of $15 million.
In December 2019 Biogen completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two new potential ophthalmology biosimilars, SB11 referencing Lucentis and SB15 referencing Eylea, in major markets worldwide, including the U.S., Canada, Europe, Japan, and Australia. In addition, Biogen acquired exclusive commercialization rights for its anti-TNF portfolio, including BENEPALI, FLIXABI, and IMRALDI, in China. Biogen also acquired an option to extend its existing commercial agreement with Samsung Bioepis for this anti-TNF portfolio in Europe.
In December 2019 Biogen announced topline results from the Phase 2 PASSPORT study of gosuranemab (BIIB092) for progressive supranuclear palsy (PSP). The primary endpoint, as measured by the PSP rating scale at week 52, was not statistically significant. In addition, the study did not demonstrate efficacy on key clinical secondary endpoints. Safety results of the PASSPORT study were generally consistent with previous studies of gosuranemab. Based on these results, Biogen discontinued development of gosuranemab for PSP and other primary tauopathies.
In December 2019 Biogen presented topline data from the aducanumab Phase 3 EMERGE and ENGAGE studies at the Clinical Trials on Alzheimer’s Disease (CTAD) annual congress in San Diego, California.
In December 2019 Biogen announced positive top-line results from the Phase 2 LILAC study evaluating the efficacy and safety of BIIB059, a fully humanized IgG1 monoclonal antibody targeting blood dendritic cell antigen 2 (BDCA2) expressed on plasmacytoid dendritic cells, in patients with lupus. LILAC was a two-part study that evaluated BIIB059 versus placebo in individuals with active cutaneous lupus erythematosus (CLE), including chronic and subacute subtypes, with or without systemic manifestations and in individuals with systemic lupus erythematosus (SLE) with active joint and skin manifestations. Both the CLE and SLE parts of the study met the primary endpoints. The safety and tolerability profile of BIIB059 supports its continued development, and Biogen plans to advance BIIB059 to Phase 3.
In November 2019 Biogen presented detailed results from the Phase 3 EVOLVE-MS-2 study of VUMERITY (diroximel fumarate) at the 27th Annual Meeting of the European Charcot Foundation in Italy. VUMERITY is a novel oral fumarate with a distinct chemical structure, and the EVOLVE-MS-2
results demonstrated improved patient-assessed gastrointestinal (GI) tolerability as compared to TECFIDERA (dimethyl fumarate).
In November 2019 Biogen completed enrollment in the global Phase 3 STAR clinical study, which is evaluating the investigational gene therapy BIIB111 for the potential treatment of CHM. CHM is a rare, degenerative, X-linked inherited retinal disorder that leads to blindness and currently has no approved treatments.
In October 2019 the U.S. Food and Drug Administration approved VUMERITY for the treatment of relapsing forms of MS, including clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease.In October 2019 Biogen announced that it plans to submit a regulatory filing for aducanumab in Alzheimer’s disease based on a new analysis of a larger dataset from the Phase 3 EMERGE and ENGAGE studies.
Conference Call and Webcast
The Company’s earnings conference call for the fourth quarter will be broadcast via the internet at 8:00 a.m. ET on January 30, 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.