Analyst Conference Summary


conference date: May 4, 2017 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2017 (first quarter 2017)

Forward-looking statements

Overview: This is the first time Bioverativ is reporting results, as it was spun off from Biogen during the quarter, on February 1. Comparisons to earlier periods are pro-forma.

Basic data (GAAP):

Revenue was $259.1 million, up 1% sequentially from $256.2 million, and up 35% from $191.7 million year-earlier.

Net income was $69.3 million, up 4% from $66.7 million year-earlier.

EPS (diluted) was $0.64, up 3% from $0.62 year-earlier.

Initial diluted share count is given as 108.2 million.



Conference Highlights:

“We are pleased with the execution of the spin-off and launch of Bioverativ. In our first quarter as an independent company, the results underscore the strength of our hemophilia portfolio and our ability to drive Eloctate® and Alprolix® performance,” said John Cox, CEO of Bioverativ. “Our products continue to deliver growth as an increasing number of patients are treated with these life-changing therapies across each of our geographies. We are focused on advancing our strategy to become a leading hematology rare disease company by driving commercial performance, advancing our pipeline, and pursuing business development opportunities. Our strong financial position, ability to generate meaningful free cash flow, and world-class scientific expertise provide us with the means to invest in innovation while always remaining focused on maximizing shareholder value.”

Has been generating data that enhances the story for Eloctate and Alprolix use. The Alprolix space is more competitive than the Eloctate space. In both, switching patients favor the Bioverativ products.

Non-GAAP results: net income $74.0 million, EPS $0.68.

Cash and equivalents ended at $358.7 million. Cash flow from operations was $108.2 million. Accounts receivable $144.4 million. Inventory $91.4 million. No debt.

Initiating two Phase 4 studies of Eloctate's ability to eliminate inhibitors in Hemophilia A.

Plans to start a BIVV001 Phase 1/2a study for once weekly or less frequent dosing of FVIII in the second half of 2017.

Cost of sales was $63.3 million. R&D expense $36.9 million. SG&A expnese $47.0 million. Total expenses $147.2 million. Leaving income from operations of $111.9 million. Other expense 0.4 million. Income tax expense $42.2 million. (37.8% tax rate)

Cost of sales include royalties to Sobi. [But revenue includes Sobi collaboration sales in Europe].

Continues to review tax planning strategies due to the high tax rate.

Looking at business development, or acquisition, opportunities.


Tax rate relief? We are running dual paths, depending on if the corporate tax rate gets lowered by Congress. Geographic expansion would reduce our overall rate. There are IRS compliant strategies that are common in the industry that we might make use of.

Patients who have not switched to Eloctate? We have strong net positive switches to Eloctate, mostly from shorter-acting agents.

If Shire's study has positive results later this year, on Factor 8 levels, how would that standard of care affect Bioverativ? With our long-acting products we showed you could increase and personalize trough levels, which vary for individuals in relation to bleed rates. Some of our evalutation looks at outcomes, not just levels. Our results show good bleed rates.

Reaffirming full year revenue guidance? Sticking to annual guidance. Restated prior guidance, said is comfortable with it.

Australia, Latin American expansion timelines? The decision is based on reimbursement decisions. We have approvals in the markets. We also need to set up infrastructure. Guidance does not assume launches in Australia or Latin America.

Ideal patient to convert to Alprolix or Eloctate? Real world results align consumption, adherence and outcomes. Patients choose the dosing details. We don't think anyone should be on short-acting or on-demand therapies.

Inhibitor effort, data we have not seen? FC is part of the immune system. Just 3 patients were given Eloctate for weeks or months to gain tolerance. It is a huge unmet need. We are doing basic research, it is too early to know.

Business development details, early or late stage? We are not desperate, we are going to be smart about what would add assets. We are actively looking at opportunities in the benign hematology or rare diseases. It does not have to be late stage, needs to be at a fair price.

Collaboration revenue? Royalties plus revenue from manufacturing product. In Q1 one-third royalties, two-thirds product, but that should shift more to royalties over time.

Alprolix v. Eloctate seasonality? Hemophilia space traditionally has Q1 seasonality, affected Alprolic more this year because it is a smaller market.

Sub-q planned competition? We have some sub-q therapies in development. First will come BIVV001, which will be longer-acting.

Shire one-per-week possible product? We would need to see some clinical data to compare. Conceptually the approaches are very different in their molecular engineering.

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Disclaimer: My analyst call summaries may include both condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. These are my personal notes which I share with other investors and which I use as the basis of my blog and Seeking Alpha articles.

Copyright 2017 William P. Meyers