Analyst Conference Call Summary

biotechnology

conference date: February 13, 2024 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2023 (fourth quarter, Q4 2023)

Forward-looking statements

Overview: Declining revenue and profit despite new therapy approvals.

Basic data (GAAP):

Revenues were $2.39 billion, down 6% sequentially from $2.53 billion and down 6% from $2.54 billion in the year-earlier quarter.

Net income $250 million, up sequentially from negative $68 million and down 55% from $550 million in the year-earlier quarter.

EPS (earnings per share, diluted) were $1.71, up sequentially from negative $0.47 and down 55% from $3.79 year-earlier.

Guidance:

In 2024 revenue is expected to decline in the single digit % range vs. 2023. But margins should expand, leading to EPS non-GAAP growth to $15.00 to $16.00.

Conference Highlights:

CEO Christopher A. Viehbacher said: "2023 was a year of transformation for Biogen as we saw approval for four first-in-class medicines while we realigned our cost structure, remained prudent in allocating shareholder capital, and reprioritized our pipeline. We believe with these key elements in place we are now well positioned to return Biogen to sustainable growth. As we look to 2024, our focus is on operational execution, including building upon the progress of our recent new product launches. We believe this will allow us to continue to advance our goal of a new Biogen that creates enhanced value for patients and our shareholders." Aims to return to sustainable growth. MS business continues to decline due to competition. Fit for Growth plan should cut expenses by $1 billion by 2025, and increase margins. Biogen is exploring strategic alternatives for its biosimilar business.

New growth drivers will be Leqembi, Skyclarys, Zurzuvae, and the ALS therapy Tofersen. Tecfidera won marketing protection in Europe until February 2025.

Leqembi (lecanemab) for Alzheimer's was approved in China and Japan. Now has a trial for Leqembi in preclinical AD, AHEAD 3-045. Also working on a subcutaneous formulation, maintenance dosing OLE study. Q4 2023 GAAP and non-GAAP R&D expense included $45 million related to the Leqembi collaboration and approximately $60 million in close out costs related to Aduhelm. Another $56 million was for SGA expenses for Leqembi. Currently has about 2,000 patients on therapy; 3,800 on registry, so seeing demand. Believes the overall treatment plan needs to be to prevent or minimize damage.

Biogen and Sage's Zurzuvae [zuranolone] for the treatment of major postpartum depression (PPD) was approved by the FDA in early August 2023. It was given a favorable DEA rating in November, 2023, allowing for sales to begin in December 2023, with main launch in Q1 2024. Enourmous unmet need, good media coverage. Half million potential patients per year. Early indications are strong.

In the first half of 2024 expects Qalsody decision in the EU.

Skyclarys (omaveloxolone) for Friedrich's ataxia launch is underway, 1,000 patients to date. On February 12, 2024 announced the European Commission grnted its approval.

In Q4, 2023 biogen terminated the Fampyra collaboration with Acorda Therapeutics, which ill regain global rights on January 1, 2025.

Biogen is in a Phase 2 study of BIIB080 and a Phase 1 study of BIIB113 for tau in Alzheimer's.

BIIB121 for Angelman Syndrome is in a Phase 1 study, with encouraging interim results. In a long term extension portion, with more data midyear 2024.

In Q4 used about $1.4 billion of cash in relation to Reata acquisition. Will have less interest income in 2024 due to cash spend on Reata.

In Lupus has two potential therapies in Phase 3, Dapirolizumab Pegol and Litifilimab. Data expected mid 2024.

Biogen currently has four more biosimilar programs in development. Biogen is considering strategic options for its biosimilar business.

Non-GAAP net income was $ million, up % sequentially from $635 million and down % from $ million year-earlier. Non-GAAP EPS diluted was $, up % sequentially from $4.36 and down % from $ year-earlier.

Total product revenue was $1.83 billion, up 1% sequentially from $1.81 billion and down 4% from $1.90 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 $1.05 billion, down sequentially from $2.29 billion. $6.9 billion debt. $0 million was spent to repurchase shares. $13 million cash flow from operations. $65 million cap ex. negative $53 million free cash flow. No shares were repurchased. In Q4 paid $350 million of the $1 billion term loan for acquiring Reata.

GAAP Cost of sales was $618 million. R&D expense was $571 million. SG&A expense $609 million. Amortization of acquired intangible assets $77 million. Collaboration profit sharing income $54 million. Restructuring charges $99 million. Other expense $67 million. Total cost and expenses $2.09 billion. Leaving income from operations of $292 million. Income tax $43 million.

See also the Biogen product pipeline. The entire pipeline includes 27 clinical programs.

Q&A selective summary:

Sub q and maintenance approval timeline, uptake? Leqembi 6 month data was shared last year, showed bioequivalence. Meeting with FDA. Hope to file by end of March 2024. IV Maintenance filing also in Q1 2024. The main subq benefit is convenience. We are also looking at a study of earlier stage patients. Then, if positive, time on drug will expand. V. Lilly drug, we have a better safety record than donanemab. The timelines on the trials were different, we need to see more data.

Leqembi coverage, Medicare Advantage? We believe Medicare Advantage access is the same as Medicare. Bottlenecks seem to be getting into a neurologist, validation of patients, particularly scheduling the first MRI post infusion.

Lupus CD40 Phase 3? Expect results mid 2024. We expect to need a second Phase 3 trial. We did make a protocol amendment. We believe it is appropriately powered, should give a clear readout on its potential.

Adding of Biogen resources in U.S. for Leqembi? It is about complexity. We have other players besides the neurologists that need coordination. Complexity of reimbursement. Coordinated well with Eisai, and are clearer on the process, so we are putting the resources in the right places.

Skyclarys EU approval, launch dynamics? We can launch formally in Germany, converting early access to commercial patients. Also have early access in France, working on other countries. Getting pricing and reimbursement in Europe can take some time. FA is more common in people of European descent. Working on filings in Latin America. Will not file or launch in Asia as there are very few patients there.

Approvable endpoints in Angelman's, competition? Ionis leading, we have the option to join for a pivotal study. Phase 1b trial with LTE. Will look for EEG trends and clinical endpoints, of which there are several. We believe we are well positioned against Ultragenics and Roche, but need to see data.

We believe we can grow Spinraza largely because only about 1/3 of patients have been identified.

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