Analyst Conference Summary


conference date: August 3, 2017 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2017 (second quarter 2017)

Forward-looking statements

Overview: Strong y/y revenue growth. This is the second time Bioverativ is reporting results, as it was spun off from Biogen during the prior quarter, on February 1. Comparisons to year-earlier periods are pro-forma.

Basic data (GAAP):

Revenue was $289.1 million, up 12% sequentially from $259.1 million, and up 37% from $210.3 million year-earlier.

Net income was $77.1 million, up 11% sequentially from $69.3 million, and up 21% from $63.5 year-earlier.

EPS (diluted) was $0.71, up 11% sequentially from $0.64, and up 20% from $0.59 year-earlier.


Updated revenue growth up to between 23% and 25% y/y. Operating margin down due to acquisition to 36% to 39% GAAP, or 41% to 44% non-GAAP. Tax rate 35% to 37%.

Conference Highlights:

John Cox, CEO of Bioverativ, said "We continued to execute across all aspects of the business, delivering strong commercial performance, completing the acquisition of True North Therapeutics, a leader in complement biology, and advancing our pipeline. The acquisition added a first-in-class candidate [BIVV009] to treat cold agglutinin disease to our pipeline and plans are in place for this program to enter Phase 3 trials this year."

Non-GAAP results: net income $95.4 million, up sequentially from $74.0 million. EPS $0.88, up sequentially from $0.68.

Eloctate revenue was $174.2 million, up 12% sequentially from $155.9 million, and up 40% y/y from $124.6 million.

Alprolix revenue was $89.7 million, up 4% sequentially from $86.0 million and up 12% from $80.3 million year-earlier.

Revenue can continue to expand through increased market share in existing markets and adding new international markets.

Cash and equivalents ended at $177.4 million, down sequentially from $358.7 million. Cash flow from operations was $133.2 million. No debt. Cash decrease was from acquisition of True North: $406 million was used in investing activities in the first half.

Initiated two Phase 4 studies of Eloctate's ability to eliminate inhibitors in Hemophilia A. Presented 19 hemophilia related abstracts at ISTH.

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

The BIVV009 phase 3 trials for cold agglutinin disease should begin this year. One trial for more severe patients, one for less severe. Investigating possible other indications for 009.

Cost of sales was $80.5 million. R&D expense $33.7 million. SG&A expense $61.3 million. Total expenses $175.5 million. Leaving income from operations of $113.6 million. Other income $3 million. Income tax expense $39.5 million.

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.

Vision is to become the leading rare blood disorders company.


BIVV009, additional data at ASH? Not that much more data than is already known. We don't anticipate recruitment being a problem despite its being a rare disease.

Other revenue, will it recur? It is collaboration revenue. About 1/3 from royalties, 2/3 from selling product to Sobi. Sobi sales have been growing, but there could be seasonality.

Isn't guidance conservative? Guidance is achievable and credible.

International expansion timing? We have added some key hires in select markets as we work towards reimbursement. Timing depends on reimbursement decisions.

Market shares? Eloctate 15%, Alprolix 26%. For Eloctate we are catching switches from all short-acting therapies. Alprolix switch rate continues high, but competition is intense.

BIVV009 vs. gene therapy or other approaches? There is some progress in gene therapy, and confirms our own work with lentivirus. Believes gene therapy will be important in the hemophilia space over time. The data is interesting, but the results are inconsistent patient by patient.

% of population addressed by the two 009 trials? At least 80%. Almost all patients eventually become transfusion dependent.

Cash, capacity for more deals? We think 3 to 4 time EBITDA would be a comfortable leverage ratio. We are generating great cash flow. We will be disciplined, looking for outsized shareholder returns.


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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