On February 3, 2021 Biogen Inc. (Nasdaq: BIIB) reported fourth quarter and full year 2020 financial results (Press release, Biogen, FEB 3, 2021, View Source [SID1234574564]).
"In 2020 Biogen executed well and maintained leadership across our core businesses in multiple sclerosis (MS), spinal muscular atrophy (SMA), and biosimilars, while simultaneously making significant progress towards building a multi-franchise portfolio through both internal pipeline developments and multiple new strategic collaborations," said Michel Vounatsos, Biogen’s Chief Executive Officer.
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"Although we expect a financial reset in 2021 primarily due to the entry of TECFIDERA generics, we believe that 2021 has the potential to be a transformative year for our pipeline with an anticipated regulatory decision in the U.S. on aducanumab for Alzheimer’s disease in June as well as pivotal trial readouts in postpartum depression, major depressive disorder, ALS, and choroideremia," Vounatsos said. "I’m proud of all that we have achieved in a challenging year, while also accelerating our actions on health and climate as well as diversity and inclusion."
Fourth Quarter 2020 Financial Results
•Fourth quarter total revenues were $2,853 million, a 22% decrease versus the prior year at both actual and constant currency*.
◦MS revenues, including royalties on sales of OCREVUS, of $1,806 million decreased 24% versus the prior year at both actual and constant currency.
◦SPINRAZA revenues of $498 million decreased 8% versus the prior year at actual currency and decreased 10% at constant currency.
◦Biosimilars revenues of $197 million increased 1% versus the prior year at actual currency and decreased 4% at constant currency.
•Fourth quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $358 million and $2.32, respectively.
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•Fourth quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $706 million and $4.58, respectively.
Full Year 2020 Financial Results
•Full year total revenues were $13,445 million, a 6% decrease versus the prior year at both actual and constant currency*.
◦MS revenues, including royalties on sales of OCREVUS, of $8,678 million decreased 6% versus the prior year at actual currency and decreased 5% at constant currency.
◦SPINRAZA revenues of $2,052 million decreased 2% versus the prior year at actual currency and decreased 1% at constant currency.
◦Biosimilars revenues of $796 million increased 8% versus the prior year at actual currency and increased 6% at constant currency.
•Full year GAAP net income and diluted EPS attributable to Biogen Inc. were $4,001 million and $24.80, respectively.
•Full year Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $5,436 million and $33.70, respectively.
A reconciliation of GAAP to Non-GAAP financial measures included in this news release can be found in Table 4 at the end of this news release.
* 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.
Expense Highlights
•GAAP R&D expense in the fourth quarter of 2020 included a $1,084 million charge related to Biogen’s collaboration with Sage Therapeutics, Inc. (Sage), comprising an $875 million upfront payment and a $209 million premium paid on Sage common stock purchased. These amounts are excluded from Non-GAAP R&D expense.
•GAAP and Non-GAAP R&D expense in the fourth quarter of 2020 included a total of $68 million in upfront payments related to collaboration agreements with Scribe Therapeutics Inc., Atalanta Therapeutics (Atalanta), and ViGeneron GmbH (ViGeneron).
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•Fourth quarter 2020 GAAP amortization and impairment of acquired intangible assets was $249 million and included a $115 million impairment charge related to timrepigene emparvovec (BIIB111), which was obtained as part of our acquisition of Nightstar Therapeutics plc. During the fourth quarter of 2020 we began experiencing third-party manufacturing delays for BIIB111 and determined that forecasted costs associated with advancing the program through development and commercialization will exceed our original estimates. We also recognized a GAAP impairment charge of approximately $75 million during the fourth quarter of 2020 related to the discontinuation of BIIB054 (cinpanemab) in Parkinson’s disease based on data from the Phase 2 SPARK study, which did not meet its primary or secondary endpoints. Full year 2020 GAAP amortization and impairment of acquired intangible assets was $465 million. These amounts are excluded from Non-GAAP results.
•Fourth quarter 2020 GAAP gain on fair value remeasurement of contingent consideration was $63 million, including $51 million related to BIIB054. Full year 2020 GAAP gain on fair value remeasurement of contingent consideration was $86 million. These amounts are excluded from Non-GAAP results.
•Fourth quarter 2020 GAAP and Non-GAAP net expense related to collaboration profit sharing was $66 million. Full year 2020 GAAP and Non-GAAP net expense related to collaboration profit sharing was $233 million.
Other Financial Highlights
•Fourth quarter 2020 GAAP other income was $684 million, primarily driven by gains on strategic equity investments of $734 million partially offset by $52 million of net interest expense. Fourth quarter 2020 Non-GAAP other expense was $51 million, primarily driven by $52 million of net interest expense. Full year 2020 GAAP other income was $497 million, primarily driven by gains on strategic equity investments of $694 million partially offset by $181 million of net interest expense. Full year 2020 Non-GAAP other expense was $187 million, primarily driven by $171 million of net interest expense.
•Fourth quarter 2020 effective GAAP and Non-GAAP tax rates were 3.8% and 15.9%, respectively. Full year 2020 effective GAAP and Non-GAAP tax rates were 19.7% and 17.9%, respectively. The fourth quarter 2020 effective GAAP tax rate was impacted by the effective settlement of certain tax matters during the quarter.
•In the fourth quarter of 2020 Biogen repurchased approximately 1.6 million shares of the Company’s common stock for a total value of $400 million. Throughout 2020 Biogen repurchased approximately 22.4 million shares of the Company’s common stock for a total value of $6,679 million. As of December 31, 2020, there was $4,600 million remaining under the share repurchase program authorized in October 2020.
•For the fourth quarter of 2020 the Company’s weighted average diluted shares were 154 million. For 2020 the Company’s full year weighted average diluted shares were 161 million.
•Fourth quarter 2020 net cash outflow from operations was $367 million. Capital expenditures were $86 million, and free cash flow, defined as net cash flow from operations less capital expenditures, was a net cash outflow of $453 million. Fourth quarter cash flow was negatively impacted by the upfront payments to Denali Therapeutics Inc. (Denali) and Sage and the equity premium paid to Sage.
•Full year 2020 net cash flow from operations was $4,230 million. Capital expenditures were $425 million, and free cash flow, defined as net cash flow from operations less capital expenditures, was $3,805 million. Full year cash flow was negatively impacted by the upfront payments and equity premiums paid to Sangamo Therapeutics, Inc., Denali, and Sage.
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•As of December 31, 2020, Biogen had $7,426 million in total debt, and cash, cash equivalents, and marketable securities totaling $3,382 million, resulting in net debt of $4,044 million.
2021 Financial Guidance
Biogen expects full year 2021 revenue to be between $10.45 billion and $10.75 billion, Non-GAAP diluted EPS to be between $17.00 and $18.50, and capital expenditures to be between $375 million and $425 million.
This financial guidance assumes aducanumab, an investigational treatment for Alzheimer’s disease, will be approved in the U.S. by June 7, 2021, although uncertainty remains on the U.S. Food and Drug Administration’s (FDA) decision. If aducanumab is approved in the U.S., Biogen expects an immediate launch with only modest revenue in 2021, ramping thereafter. This financial guidance further assumes there will be a sharp decline of TECFIDERA in the U.S. during the first half of 2021. Biogen also expects that there will be significant erosion of RITUXAN in the U.S.
Non-GAAP R&D expense is expected to be between $2.35 billion and $2.45 billion, and Non-GAAP SG&A expense is expected to be between $2.6 billion and $2.7 billion. This Non-GAAP SG&A expense estimate includes approximately $600 million in support of the potential launch of aducanumab, approximately $200 million of which would be reimbursable by Eisai Co., Ltd. (Eisai) and reflected on the collaboration profit sharing line post-commercialization. The Non-GAAP tax rate for 2021 is expected to be between 16% and 17%.
In addition, this financial guidance assumes that we will utilize a portion of the remaining share repurchase authorization of $4.6 billion throughout 2021, and that foreign exchange rates as of December 31, 2020, will remain in effect for the year, net of hedging activities.
This financial guidance does not include any impact from potential acquisitions or large business development transactions, as both 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 2021 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.
Recent Events
•In January 2021 the FDA extended the review period by three months for the Biologics License Application (BLA) for aducanumab. The updated Prescription Drug User Fee Act (PDUFA) action date is June 7, 2021. As part of the ongoing review, Biogen submitted a response to an information request by the FDA, including additional analyses and clinical data, which the FDA considered a Major Amendment to the application that will require additional time for review. Biogen is collaborating with Eisai on the development of aducanumab.
•In January 2021 Biogen announced that the FDA approved a new intramuscular (IM) injection route of administration for PLEGRIDY for the treatment of relapsing forms of MS. The new IM
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administration of PLEGRIDY provides the well-characterized efficacy and safety of the platform injectable along with the potential for reduced injection site reactions. This FDA approval follows approval by the European Commission in December 2020.
•In January 2021 Biogen announced a new virtual research study, in collaboration with Apple, to investigate the role Apple Watch and iPhone could play in monitoring cognitive performance and screening for decline in cognitive health including mild cognitive impairment, an early indicator of certain forms of dementia such as Alzheimer’s disease.
•In January 2021 Biogen announced first patient treated in a global clinical study, RESPOND. The Phase 4 study will examine the clinical benefit and assess the safety of SPINRAZA in infants and children with SMA who still have unmet clinical needs following treatment with gene therapy Zolgensma (onasemnogene abeparvovec). RESPOND will be conducted at approximately 20 sites worldwide and aims to enroll up to 60 children with SMA.
•In the fourth quarter of 2020 Biogen entered into a global collaboration and licensing agreement with ViGeneron, a gene therapy company, to develop and commercialize gene therapy products based on adeno-associated virus (AAV) vectors to treat inherited eye diseases. The companies will use ViGeneron’s proprietary vgAAV, novel engineered AAV capsids, to efficiently transduce retinal cells via intravitreal injections. ViGeneron will be eligible to receive milestone payments as well as tiered royalties on net commercial sales of products arising from the collaboration.
•In the fourth quarter of 2020 Biogen submitted a Japanese New Drug Application to the Ministry of Health, Labor and Welfare for aducanumab. The Japanese regulatory authority will review the application through the standard review process.
•In the fourth quarter of 2020 Biogen and Sage announced a global collaboration and license agreement to jointly develop and commercialize zuranolone (SAGE-217) for major depressive disorder, postpartum depression, and other psychiatric disorders and SAGE-324 for essential tremor and other neurological disorders. Under the agreement, Biogen made an $875 million upfront payment and an equity investment of $650 million and may pay up to $1.6 billion in potential milestone payments as well as potential profit sharing and royalties.
•In the fourth quarter of 2020 Samsung Bioepis Co., Ltd. and Biogen announced that the FDA accepted for review the BLA for SB11, a proposed biosimilar referencing Lucentis (ranibizumab). Ranibizumab is an anti-VEGF (vascular endothelial growth factor) therapy for retinal vascular disorders, which are a leading cause of blindness in the U.S.
•In the fourth quarter of 2020 Biogen was ranked the number one biotechnology company on the Dow Jones Sustainability World Index (DJSI World Index) for the fifth time, more than any other biotechnology company. The DJSI World Index recognizes the top 10% of companies in the S&P Global Broad Market Index for performance on environmental, social, and governance issues, which S&P Global considers key to generating long-term stakeholder value.
•In the fourth quarter of 2020 the FDA held a virtual meeting of the Peripheral and Central Nervous System Drugs Advisory Committee (the Advisory Committee) to review data supporting the BLA for aducanumab and to vote on questions presented at the meeting. A majority of the Advisory Committee members voted against each of the questions presented at the meeting. FDA advisory committees provide non-binding recommendations for consideration by the FDA.
•In the fourth quarter of 2020 Biogen entered into strategic collaboration with Atalanta, a biotechnology company pioneering new treatment options for neurodegenerative disease, to develop RNAi therapeutics for multiple CNS targets for neurodegenerative diseases, including Parkinson’s
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disease and Alzheimer’s disease. Atalanta will be eligible to receive development and milestone payments on these programs as well as potential royalty payments.
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 February 3, 2021, 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.