Bulletin
Investor Alert

Oct. 20, 2021, 4:23 p.m. EDT

10-Q: BIOGEN INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements (condensed consolidated financial statements) and the accompanying notes beginning on page 5 of this quarterly report on Form 10-Q and our audited consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K). Executive Summary Introduction Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. Our core growth areas include multiple sclerosis (MS) and neuroimmunology; Alzheimer's disease and dementia; neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS); movement disorders, including Parkinson's disease; ophthalmology; and neuropsychiatry. We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology; acute neurology; and neuropathic pain. In addition, we commercialize biosimilars of advanced biologics. We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities. Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of primary progressive MS and relapsing MS (RMS); and other potential anti-CD20 therapies pursuant to our collaboration arrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2020 Form 10-K. Our innovative drug development and commercialization activities are complemented by our biosimilar business that expands access to medicines and reduces the cost burden for healthcare systems. Through our agreements with Samsung Bioepis Co., Ltd. (Samsung Bioepis), our joint venture with Samsung BioLogics Co., Ltd. (Samsung BioLogics), we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 16, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report. We seek to ensure an uninterrupted supply of our medicines to patients around the world. To that end, we continually review our manufacturing capacity, capabilities, processes and facilities. In order to support our future growth and drug development pipeline, we are expanding our large molecule production capacity by building a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of the facility received a Good Manufacturing Practice (GMP) multi-product license from the Swiss Agency for Therapeutic Products (SWISSMEDIC). We believe that the Solothurn facility will support our anticipated near-term needs for the manufacturing of ADUHELM and other biologic assets. In addition, we believe that the Solothurn site may provide us with the ability to further expand if we need additional large scale manufacturing capacity to support future clinical and commercial manufacturing requirements. Our revenue depends upon continued sales of our products as well as the financial rights we have in our anti-CD20 therapeutic programs, and, unless we develop, acquire rights to and/or commercialize new products and technologies, we will be substantially dependent on sales from our products and our financial rights in our anti-CD20 therapeutic programs for many years. In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial products as well as additional indications for our existing products, our ability to obtain and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities. Table of Contents Business Environment The biopharmaceutical industry and the markets in which we operate are intensely competitive. Many of our competitors are working to develop or have commercialized products similar to those we market or are developing and have considerable experience in undertaking clinical trials and in obtaining regulatory approval to market pharmaceutical products. In addition, the commercialization of certain of our own approved products, products of our collaborators and pipeline product candidates may negatively impact future sales of our existing products. Our products and revenue streams continue to face increasing competition in many markets from generic versions, prodrugs and biosimilars of existing products as well as products approved under abbreviated regulatory pathways. Such products are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of such products as well as other lower-priced competing products may significantly reduce both the price that we are able to charge for our products and the volume of products we sell, which will negatively impact our revenue. In addition, in some markets, when a generic or biosimilar version of one of our products is commercialized, it may be automatically substituted for our product and significantly reduce our revenue in a short period of time. Sales of our products depend, to a significant extent, on the availability and extent of adequate coverage, pricing and reimbursement from government health administration authorities, private health insurers and other organizations. When a new pharmaceutical product is approved, the availability of government and private reimbursement for that product may be uncertain, as is the pricing and amount for which that product will be reimbursed. Drug prices are under significant scrutiny in the markets in which our products are prescribed. We expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis. Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenue and results of operations, could curtail or eliminate our ability to adequately fund research and development programs for the discovery and commercialization of new products or could cause a decline or volatility in our stock price. In addition to the impact of competition, pricing actions and other measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, our sales and operations could also be affected by other risks of doing business internationally, including the impact of public health epidemics, such as the COVID-19 pandemic, on employees, the global economy and the delivery of healthcare treatments, foreign currency exchange fluctuations, changes in intellectual property legal protections and changes in trade regulations and procedures. For additional information on our competition and pricing risks that could negatively impact our product sales, please read Item 3. Quantitative and Qualitative Disclosures About Market Risk and Item 1A. Risk Factors included in this report. ADUHELM (aducanumab) U.S. In June 2021 the U.S. Food and Drug Administration (FDA) granted accelerated approval of ADUHELM, which we are developing in collaboration with Eisai Co., Ltd. (Eisai), based on reduction in amyloid beta plaques observed in patients treated with ADUHELM. As part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer's disease. The FDA may withdraw approval if, among other things, the confirmatory trial fails to verify clinical benefit, ADUHELM's benefit-risk is no longer positive or we fail to comply with the conditions of the accelerated approval. The U.S. ADUHELM product label states that treatment with ADUHELM should be initiated in patients with mild cognitive impairment or mild dementia stage of disease, the population which was studied in clinical trials. We expect patient uptake will be gradual and we do not expect all eligible patients will be treated with ADUHELM for a variety of reasons, including appropriate patient selection criteria, a complex diagnostic and care pathway, the lack of readiness of healthcare providers and institutions to initiate treatment, concern regarding the accelerated approval of ADUHELM and its data and the ability to obtain and maintain adequate reimbursement for ADUHELM. We expect a Medicare National Coverage Determination by the second quarter of 2022, which should clarify Medicare reimbursement for the class of antibodies directed against amyloid. Under our collaboration agreement with Eisai (ADUHELM Collaboration Agreement), we and Eisai will co-promote ADUHELM with a region-based profit split, with Eisai reimbursing us for 45.0% of development and commercialization costs incurred by the collaboration for the advancement of ADUHELM in the U.S. Shipments of ADUHELM commenced during the second quarter of 2021. We have made, and will continue to make, commercial, medical and infrastructure investments in support of activities associated with the launch of ADUHELM in the U.S., including the adding of Table of Contents headcount and the manufacture of pre-launch inventory. Rest of World In October 2020 the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application for aducanumab and in December 2020 the Ministry of Health, Labor and Welfare accepted for review the Japanese New Drug Application (NDA) for aducanumab. If we do not receive regulatory approval or are unable to successfully commercialize aducanumab in other jurisdictions, our financial condition, business and operations may be adversely affected. TECFIDERA In June 2020 and September 2020 judgments were entered in favor of the defendants in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in West Virginia and Delaware. We have appealed the judgments in both actions. Multiple TECFIDERA generic entrants are now in the U.S. market and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to have a substantial negative impact on our TECFIDERA revenue for as long as there is generic competition. On May 5, 2021, the European General Court annulled the EMA's non-validation decision with respect to a generic application related to TECFIDERA in the European Union (E.U.). This generic application is now before the EMA, which is reassessing TECFIDERA's regulatory data protection by performing a scientific assessment pursuant to the European General Court's decision. The result of the scientific assessment of the EMA is expected in the fourth quarter of 2021. We have appealed the European General Court's decision to the European Court of Justice and the appeal is pending. We will face TECFIDERA generic competition in the E.U. if regulatory data protection is not upheld and we expect that this would have an adverse impact on our TECFIDERA sales and our results of operations. For additional information, please read Note 18, Litigation, to our condensed consolidated financial statements included in this report and the discussion under Results of Operations - Product Revenue - Multiple Sclerosis (MS) - Fumarate below. Business Update Regarding COVID-19 The COVID-19 pandemic continues to present a substantial public health and economic challenge around the world. The length of time and full extent to which the COVID-19 pandemic directly or indirectly impacts our business, results of operations and financial condition, including sales, expenses, reserves and allowances, the supply chain, manufacturing, clinical trials, research and development costs and employee-related costs, depends on future developments that are highly uncertain, subject to change and are difficult to predict, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19 as well as the economic impact on local, regional, national and international customers and markets. We are monitoring the demand for our products, including the duration and degree to which we may see delays in starting new patients on a product due to hospitals diverting the resources that are necessary to administer certain of our products to care for COVID-19 patients, including products, such as TYSABRI and SPINRAZA, that are administered in a physician's office or hospital setting. We may also see reduced demand for immunosuppressant therapies during the COVID-19 pandemic. While we are currently continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions have impacted the timeline for some of our clinical trials and these precautions may, directly or indirectly, have a further impact on timing in the future. For example, our Phase 3 study of BIIB093 (glibenclamide IV) for large hemispheric infarction (LHI), a severe form of ischemic stroke, has been delayed as this study involves administration of BIIB093 in an acute hospital setting. To help mitigate the impact of the COVID-19 pandemic to our clinical trials, we are pursuing innovative approaches such as remote monitoring, remote patient visits and supporting home infusions. These alternative measures have resulted in an immaterial increase to the cost of the clinical trials underway. Factors such as the COVID-19 pandemic, adverse weather events, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays in manufacturing our products. For additional information on the various risks posed by the COVID-19 pandemic, please read Item 3. Quantitative and Qualitative Disclosures About Market Risk and Item 1A. Risk Factors included in this report. Table of Contents Financial Highlights Diluted earnings per share attributable to Biogen Inc. was $2.22 for the three months ended September 30, 2021, representing a decrease of 50.2% compared to $4.46 in the same period in 2020. As described below under Results of Operations, our net income and diluted earnings per share attributable to Biogen Inc. for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, reflects the following: Revenue Total revenue was $2,778.9 million for the third quarter of 2021, representing a $597.2 million, or 17.7%, decrease compared to $3,376.1 million in the same period in 2020. Product revenue, net totaled $2,205.7 million for the third quarter of 2021, representing a $484.6 million, or 18.0%, decrease compared to $2,690.3 million in the same period in 2020. This decrease was primarily due to a $428.9 million, or 21.6%, decrease in MS product revenue as well as a $50.3 million, or 10.2%, decrease in SPINRAZA product revenue. The decrease in MS product revenue was primarily due to a decrease in U.S. TECFIDERA demand as a result of multiple TECFIDERA generic entrants in the U.S. market. The decrease in SPINRAZA revenue was primarily due to a decrease in demand as a result of increased competition in the U.S. Revenue from anti-CD20 therapeutic programs totaled $415.4 million for the third quarter of 2021, representing a $144.7 million, or 25.8%, decrease compared to $560.1 million in the same period in 2020. This decrease was primarily due to a $136.2 million, or 51.7%, decrease in RITUXAN revenue. Sales of RITUXAN have been adversely affected by the onset of biosimilars competition. Other revenue totaled $157.8 million for the third quarter of 2021, representing a 25.5% increase from $125.7 million in the same period in 2020. Expense Total cost and expense was $1,984.9 million for the third quarter of 2021, representing a $304.8 million, or 13.3%, decrease compared to $2,289.7 million in the same period in 2020. This decrease was primarily due to a $438.5 million decrease in research and development expense. The decrease in research development expense for the third quarter of 2021 was primarily due to $601.3 million in upfront payments recognized in connection with our collaboration with Denali Therapeutics Inc. (Denali) in the third quarter of 2020. As described below under Financial Condition, Liquidity and Capital Resources: We generated $2,801.6 million of net cash flows from operations for the nine months ended September 30, 2021. Cash, cash equivalents and marketable securities totaled approximately $3,923.4 million as of September 30, 2021. We repurchased and retired approximately 2.2 million shares of our common stock at a cost of approximately $750.0 million during the third quarter of 2021 under a program authorized by our Board of Directors in October 2020 to repurchase up to $5.0 billion of our common stock (2020 Share Repurchase Program). Approximately $2.8 billion remained available under our 2020 Share Repurchase Program as of September 30, 2021. Table of Contents Acquisitions and Collaborative and Other Relationships InnoCare Pharma Limited In July 2021 we entered into a license and collaboration agreement with InnoCare Pharma Limited (InnoCare) for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. For additional information on our proposed collaboration with InnoCare, please read Note 16, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report. Other Key Developments Exchange Offer In February 2021 we completed a private offer to exchange (Exchange Offer) our tendered 5.200% Senior Notes due September 15, 2045 (2045 Senior Notes) for a new series of 3.250% Senior Notes due February 15, 2051 (2051 Senior Notes) and cash, and an offer to purchase our tendered 2045 Senior Notes for cash. For additional information on our Exchange Offer, please read Note 10, Indebtedness, to our condensed consolidated financial statements included in this report. North Carolina Gene Therapy Manufacturing Facility In March 2021 we announced our plans to build a new gene therapy manufacturing facility in Research Triangle Park, North Carolina to support our growing gene therapy pipeline across multiple therapeutic areas. The new facility will be 175,000 square feet and is expected to be operational by 2023, with an estimated total investment of approximately $200.0 million. Solothurn, Switzerland Manufacturing Facility In May 2021 we announced that a portion of our Solothurn manufacturing facility received a GMP multi-product license from SWISSMEDIC. For additional information on our Solothurn manufacturing facility, please read Note 9, Property, Plant and Equipment, to our condensed consolidated financial statements included in this report. BIIB125 (zuranolone) In June 2021 we and Sage Therapeutics, Inc. (Sage) announced positive Phase 3 results for BIIB125 (zuranolone) for the potential treatment of major depressive disorder (MDD) and postpartum depression (PPD). In October 2021 we and Sage announced our plan to submit an NDA to the FDA for zuranolone in the second half of 2022, with rolling submission expected to start in early 2022. The planned initial submission package will seek approval of zuranolone for MDD, and an additional filing for PPD is anticipated in the first half of 2023. For additional information on our collaboration arrangement with Sage, please read Note 16, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report. Lecanemab (BAN2401) In June 2021 the FDA granted Breakthrough Therapy designation for lecanemab, an anti-amyloid antibody for the potential treatment of Alzheimer's disease, which we are developing in collaboration with Eisai. In September 2021 Eisai initiated a rolling submission to the FDA of a Biologics License Application (BLA) for lecanemab. The BLA is being submitted under the accelerated approval pathway and is primarily based on clinical, biomarker and safety data from the Phase 2b clinical trial in people with early Alzheimer's disease and confirmed amyloid pathology. BYOOVIZ (ranibizumab-nuna) In September 2021 we and Samsung Bioepis announced that the FDA has approved BYOOVIZ (ranibizumab-nuna), a biosimilar referencing LUCENTIS for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, and myopic choroidal neovascularization. In addition to the U.S. approval, BYOOVIZ was approved in Europe in August 2021. BIIB067 (tofersen) In October 2021 we announced topline results from our pivotal Phase 3 VALOR study of BIIB067 (tofersen), an investigational antisense drug being evaluated for people with superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS), indicating that the primary endpoint was not met. We are engaging with regulators and other key stakeholders to determine potential next steps. Table of Contents Results of Operations Revenue Revenue is summarized as follows: For the Three Months Ended September 30, (In millions, except percentages) 2021 2020 $ Change % Change Product revenue, net: United States $ 973.5 35.0 % $ 1,498.2 44.4 % $ (524.7) (35.0) % Rest of world 1,232.2 44.4 1,192.1 35.3 40.1 3.4 Total product revenue, net 2,205.7 79.4 2,690.3 79.7 (484.6) (18.0) Revenue from anti-CD20 therapeutic programs 415.4 14.9 560.1 16.6 (144.7) (25.8) Other revenue 157.8 5.7 125.7 3.7 32.1 25.5 Total revenue $ 2,778.9 100.0 % $ 3,376.1 100.0 % $ (597.2) (17.7) % For the Nine Months Ended September 30, (In millions, except percentages) 2021 2020 $ Change % Change Product revenue, net: United States $ 2,850.7 34.6 % $ 4,803.1 45.3 % $ (1,952.4) (40.6) % Rest of world 3,802.7 46.1 3,587.5 33.9 215.2 6.0 Total product revenue, net 6,653.4 80.7 8,390.6 79.2 (1,737.2) (20.7) Revenue from anti-CD20 therapeutic programs 1,244.4 15.1 1,558.8 14.7 (314.4) (20.2) Other revenue 350.1 4.2 642.6 6.1 (292.5) (45.5) Total revenue $ 8,247.9 100.0 % $ 10,592.0 100.0 % $ (2,344.1) (22.1) % Product Revenue Product revenue is summarized as follows: For the Three Months Ended September 30, (In millions, except percentages) 2021 2020 $ Change % Change Multiple Sclerosis: Fumarate* $ 619.5 28.1 % $ 967.5 36.0 % $ (348.0) (36.0) % Interferon** 387.5 17.6 474.1 17.6 (86.6) (18.3) TYSABRI 522.8 23.7 516.5 19.2 6.3 1.2 FAMPYRA 26.2 1.2 26.8 1.0 (0.6) (2.2) Subtotal: MS product revenue 1,556.0 70.5 1,984.9 73.8 (428.9) (21.6) Spinal Muscular Atrophy: SPINRAZA 444.1 20.1 494.4 18.4 (50.3) (10.2) Alzheimer's disease: ADUHELM*** 0.3 - - - 0.3 nm Biosimilars: BENEPALI 120.8 5.5 124.2 4.6 (3.4) (2.7) IMRALDI 57.4 2.6 56.2 2.1 1.2 2.1 FLIXABI 24.6 1.1 27.5 1.0 (2.9) (10.5) Subtotal: Biosimilar product revenue 202.8 9.2 207.9 7.7 (5.1) (2.5) Other: FUMADERM 2.5 0.1 3.1 0.1 (0.6) (19.4) Total product revenue, net $ 2,205.7 100.0 % $ 2,690.3 100.0 % $ (484.6) (18.0) %

*Fumarate includes TECFIDERA and VUMERITY. **Interferon includes AVONEX and PLEGRIDY.







        . . .
        


Oct 20, 2021

COMTEX_395573030/2041/2021-10-20T16:22:49

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.