Analyst Conference Call Summary

conference date: October 23, 2018 @ 5:00 AM Pacific Time
for quarter ending: September 31, 2018 (third quarter, Q3 2018)

Forward-looking statements

Overview: Continued strong revenue and earnings ramp led by Spinraza and Ocrevus.

Basic data (GAAP):

Revenues were $3.44 billion, up 2% sequentially from $3.36 billion and up 12% from $3.08 billion in the year-earlier quarter.

Net income was $1.44 billion, up 67% sequentially from $867 million and up 18% from $1.23 billion in the year-earlier quarter.

EPS (earnings per share, diluted) were $7.15, up 71% sequentially from $4.18 and up 24% from $5.79 year-earlier.

Guidance:

Q4 2017 revenue was high due to the timing of contract revenue, making it a difficult comparison for 2018.

Conference Highlights:

CEO Michel Vounatsos said: "Biogen continued to advance our pipeline beyond our industry leading portfolios in MS and Alzheimer’s. In the third quarter, we made notable progress in stroke, progressive supranuclear palsy, and ALS. As ever, we remain focused on allocating our capital properly and efficiently with the goal of maximizing returns on behalf of our shareholders over the long-term"

Spinraza added five national markets and new positive data for infants was released. Reimbursement patterns were solid in Europe. In the U.S. believes is now treating 50% of potential infants and 15% of adults, where insurance coverage is improving. But believes revenue will be about flat Q4 v. Q3.

MS revenue was stable.

Biosimilar revenue is growing rapidly, mainly in Europe. Three main anti-TNF biosimilars are now available in Europe.

Cash generation was strong.

Over the next 12 to 18 months Biogen expects to expand its pipeline in MS and neuroimmunology, dementia, neuromuscular disorders, movement disorders, and ophthalmology.

Non-GAAP net income was $1.49 billion, up 24% sequentially from $1.20 billion and up 12% from $1.34 billion year-earlier. Non-GAAP EPS was $7.40, up 28% sequentially from $5.80 and up 17% from $6.31 year-earlier.

Total product revenue was $2.78 billion, up 1% sequentially from $2.76 billion and up 6% from $2.76 billion year-earlier. That excludes the Rituxan revenue, royalties and other revenue.

*unconsolidated joint business revenue, Anti-CD20 products
** mainly contract manufacturing

Cash and equivalents (including marketable securities) balance ended at $5.67 billion, up sequentially from $4.4 billion. $5.93 billion notes payable. $0.0 billion was spent to repurchase shares, but a new $3.5 billion was authorized. $1.7 billion cash flow from operations.

Cost of sales was $461 million. Research and development expense was $508 million. Selling, general and administrative expense $498 million. Amortization of acquired intangible assets $282 million. Acquired in-process research and development of $28 million. Fair value adjustment gain of contingent consideration $88 million. Collaboration profit sharing $48 million. Total cost and expenses $1.74 billion. Leaving income from operations of $1.70 billion. Other expense $115 million. Income taxes $370 million. Net loss attributable to noncontrolling interests, $2 million.

BIIB104 is a first-in-class, Phase 2b ready AMPA receptor potentiator for cognitive impairment associated with schizophrenia (CIAS), representing the Company’s first program in neuropsychiatry. BIIB104 has previously demonstrated an acceptable safety profile and treatment effect trends across key cognitive domains in Phase 1b clinical studies.

In June Biogen exercised its option to acquire more shares of Samsung BioLogics, its biosimilar partner. At closing Biogen will own 49.9%.

BAN2401 for Alzheimer's Phase 2 data will be presented later this week.

Aducanumab for Alzheimer's data will be presented later this week from the Phase 1b study, which are consistent with previous analyses. The Phase 3 study continues. BIIB 76, 92, and 80 for for Alzheimer's targetting Tau are all advancing 076 should report Phase 1 results in early 2020. 092 completed Phase 2 in PSP with results expected in 2H 2019.

In June 2018 Biogen and Eisai announced that elenbecestat, the oral beta amyloid cleaving enzyme inhibitor demonstrated a statistically significant difference in amyloid-beta levels in the brain measured by amyloid-PET. More data will be presented this week.

An agreement with AbbVie allows the launch of biosimilar Imraldi (Humira) in Europe in October 2018.

Opicinumab for relapsing MS completed enrollment of a phase 2b trial, Affinity. Data is expected in mid-2020.

BIIB054 for Parkinson's in Phase 2.

BIIB093 started Phase 3 for cerebral edema associated with large hemispheric infarction.

Natalizumab for drug resistant focal epilepsy started a Phase 2 study in October 2017. For acute ischemic stroke the Phase 2b trial was completed in August, with data expected in 2018.

BG00011 for idiopathic pulmonary fibrosis will go to phase 2b in 2018.

BIIB054 for early Parkinson's disease dosed its first Phase 2 patient in January 2018. Phase 1 data was positive.

BIIB095 started a Phase 1 trial for neuropathic pain in March 2018.

BIIB098 (diroximel fumarate) data for MS was positive and filing with FDA should be before year end, by partner Alkermes. Could see U.S. approval in early 2020.

BIIB074 Phase 2 for lumbosacral radiculopathy did not meet endpoints. Phase 2 for small fiber neuropathy is enrolling. BIIB074 should start for trigeminal neuralgia Phase 3 initiation has been delayed.

ALS is being targetted at the genetic level with BIIB067 and BIIB078, both in Phase 1.

Today Biogen with UCB announced the Phase 2B study of dapirolizumab pegol for systemic lupus erythematosus did not quite hit it primary endpoint, so will evaluate future steps.

See also the Biogen product pipeline. Plans to implement "a more robust product acquisition strategy" including both early and late stage assets.

Biogen aspires to becoming "the fastest growing large cap biotech." Believes can do this even if aducanumab does not get commercial approval.

Q&A:

BAN 2401 data criticism? Have to wait for presentation in Barcelona.

Aducanumab use of word "final"? It is not a comment on whether we will do an interim analysis or not. The new Phase 2 trial is to determine whether MRI monitoring is really necessary for the aria issue.

MS drug pricing? There was a slight increase.

Interacting with FDA for BAN2401? In middle of, so can't comment.

SMA competition? We follow developments, we believe we have a compelling efficacy profile. We do not know how much advantage competitor's therapies would get from being administered orally.

We believe the biosimilar revenue could double over the next two year. Supply is available and prescriptions are going up.

Given cash flow we can both invest in the pipeline and return capital to shareholders. We expect to do more deals, including late-stage programs.

XRS program? Trial is ongoing, could have a data readout in first half of 2019, depending on timing of enrollment.

Alzheimer's most likely success? We have data readouts coming up with different ramifications. BIIB067 has a different means of action, could give insights into many progress. There is an array of readouts that could create significant excitement.

There is particular investigator interest in BIIB093.

Tax rate in 2019? We are running at low 20%. We expect some trend lower in 2019, will guide in January.

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