On April 22, 2020 Biogen Inc. (Nasdaq: BIIB) reported first quarter 2020 financial results (Press release, Biogen, APR 22, 2020, View Source [SID1234556505]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"The COVID-19 pandemic has created a challenging situation for people and companies throughout the world, and Biogen personally felt the painful impact of this global crisis. During these challenging and unprecedented times, Biogen has continued to deliver on its mission and purpose," said Michel Vounatsos, Biogen’s Chief Executive Officer. "We have continued to operate our business and deliver our therapies to patients across the world and are especially grateful to our dedicated employees as we continue to execute on our strategy."

Mr. Vounatsos added, "We delivered strong financial results in the first quarter, and we continued to develop and expand our pipeline, including making good progress toward the U.S. regulatory filing for aducanumab, as well as bolstering our efforts in gene therapy through a collaboration with Sangamo. The magnitude and uncertainty surrounding this pandemic clearly introduce unanticipated and potentially unquantifiable risks to our business and results over the near-term. That said, we believe that compelling opportunities exist in the therapeutic areas we are pursuing. This crisis has had a profound impact on our organization and the world at large. We have taken a broad set of actions, and we will remain fully engaged."

Financial Results

• First quarter total revenues were $3,534 million, a 1% increase versus the first quarter of 2019.
o Multiple sclerosis (MS) revenues, including $162 million in royalties on the sales of OCREVUS, increased 9% versus the prior year to $2,280 million.
o SPINRAZA revenues increased 9% versus the prior year to $565 million.
o Biosimilars revenues increased 25% versus the prior year to $219 million.
2 o Other revenues decreased 63% versus the prior year to $109 million primarily due to the sale of approximately $200 million of hemophilia inventory to Bioverativ Inc. in the first quarter of 2019.
o Biogen estimates that its first quarter product revenues benefitted by approximately $100 million attributed to accelerated sales due to the COVID-19 pandemic, primarily in Europe.
o Additionally, Biogen’s MS revenues in the U.S. benefitted by approximately $54 million due to extra shipping days versus the prior year and prior quarter.

• First quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $1,399 million and $8.08, respectively, compared to $1,409 million and $7.15, respectively, in the first quarter of 2019.
• First quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $1,582 million and $9.14, respectively, compared to $1,374 million and $6.98, respectively, in the first quarter of 2019.

A reconciliation of GAAP to Non-GAAP quarterly financial results can be found in Table 3 at the end of this news release.

Aducanumab Update Biogen provided the following update regarding aducanumab, an anti-amyloid beta antibody candidate for the potential treatment of Alzheimer’s disease that Biogen is developing in collaboration with Eisai Co., Ltd.:

• Biogen has an open Biological License Application (BLA) with the U.S. Food and Drug Administration (FDA) and has started to submit modules of the filing.
• Biogen has participated in additional formal interactions with the FDA using mechanisms such as Type C meetings and is preparing for a pre-BLA meeting, currently scheduled for the summer of 2020.
• Following the pre-BLA meeting, Biogen expects to complete the U.S. filing in the third quarter of 2020.

In the first quarter of 2020 channel inventory levels in the U.S. decreased by approximately $115 million for TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, and TYSABRI combined. This compares to a decrease in inventory levels of approximately $170 million in the first quarter of 2019 and an increase of approximately $145 million in the fourth quarter of 2019.

• In the first quarter of 2020 SPINRAZA revenues comprised $235 million in sales in the U.S. and $330 million in sales outside the U.S. The number of commercial patients 4 receiving SPINRAZA grew approximately 1% in the U.S. and approximately 10% outside the U.S. versus the fourth quarter of 2019. R&D expense in the first quarter of 2019 included approximately $39 million related to Biogen’s agreement with Skyhawk Therapeutics, Inc. and approximately $45 million in net closeout costs for the Phase 3 studies of aducanumab in Alzheimer’s disease.

• R&D expense in the fourth quarter of 2019 included $63 million related to the transaction with Samsung Bioepis Co., Ltd., $45 million related to the option exercise for BIIB080 (tau ASO), and $30 million related to collaboration agreements with CAMP4 Therapeutics and Catalyst Biosciences, Inc. Other Financial Highlights

• In the first quarter of 2020 Biogen recognized a GAAP-only charge of $75 million related to its acquisition of BIIB118 (previously known as PF-05251749) from Pfizer Inc. (Pfizer).

• For the first quarter of 2020 GAAP and Non-GAAP collaboration profit sharing was $72 million.

• For the first quarter of 2020 GAAP other expense was $120 million, which included $61 million in unrealized losses on investments, principally driven by a decrease in the fair value of Biogen’s equity investment in Ionis Pharmaceuticals, Inc. Non-GAAP other expense for the first quarter of 2020 was $60 million driven by net interest expense, foreign exchange losses, and losses on security sales.

• For the first quarter of 2020 the Company’s effective GAAP tax rate was approximately 17%, a reduction from approximately 23% in the first quarter of 2019 due in part to the planned divestiture of our Hillerød, Denmark manufacturing operations and unrealized gains taxable at higher tax rates, both in Q1 2019. For the first quarter of 2020 the Company’s effective Non-GAAP tax rate was approximately 17%, compared to approximately 18% in the first quarter of 2019.

5 • In the first quarter of 2020 Biogen repurchased approximately 7.3 million shares of the Company’s common stock for a total value of approximately $2,220 million. o As of March 31, 2020, the share repurchase program authorized in March 2019 had been completed, and approximately $4,059 million remained under the share repurchase program authorized in December 2019.

• As of March 31, 2020, Biogen had cash, cash equivalents, and marketable securities totaling approximately $4,830 million and approximately $5,962 million in notes payable.

• In the first quarter of 2020 the Company generated approximately $1,467 million in net cash flows from operations. • For the first quarter of 2020 the Company’s weighted average diluted shares were 173 million. Biogen’s Response to COVID-19 To help ensure the health and safety of all stakeholders and society, Biogen has taken several actions in response to the ongoing COVID-19 pandemic, including:

• Implementing policies and practices to safeguard employees and communities to reduce the spread of COVID-19, including asking almost all employees to work from home.

• Providing medical equipment and supplies to Partners Healthcare in Massachusetts to help diagnose COVID-19 in a greater number of people and donating 3D-printed personal protective equipment in Massachusetts and North Carolina. • Committing $10 million from the Biogen Foundation to support global response efforts and communities around the world.

• Facilitating volunteer efforts by medically trained employees to serve as healthcare workers on the front lines and by other employees to serve the community.

• Engaging with investigators who may want to evaluate the potential of our interferon therapies to treat COVID-19.

• Launching a consortium with the Broad Institute of MIT and Harvard and Partners Healthcare to build and share a COVID-19 biobank and giving Biogen employees who have recovered from COVID-19, as well as their close contacts, the opportunity to donate samples and medical data.

• Pursuing a process development and manufacturing collaboration with Vir Biotechnology, Inc., which is developing potential antibody therapies for COVID-19. 6 Potential Business Impacts of COVID-19 Biogen has continued to operate its business to serve the needs of patients and has been continually monitoring for potential impacts: • Supply chain: Biogen has continued to operate its manufacturing facilities and is working with organizations across its supply chain to maintain continuity, while continuing to closely monitor the evolving situation.

• Regulatory interactions: Biogen is continuing its frequent interactions with regulatory authorities, including for aducanumab.

• Clinical trials: Biogen is working on a case-by-case basis to continue safely advancing as many of its clinical trials as possible. To help mitigate the impact to its clinical trials, the Company is pursuing innovative approaches such as remote monitoring, remote patient visits, and supporting home infusions. While Biogen does expect there will be some impact to timelines for some of its clinical programs, it still expects the vast majority of the 10 remaining near-term readouts to occur before the end of 2021. Recent Events

• In April 2020 Biogen, Broad Institute of MIT and Harvard, and Partners HealthCare announced a consortium that will build and share a COVID-19 biobank. The biobank will help scientists study a large collection of de-identified biological and medical data to advance scientific knowledge and search for potential vaccines and treatments for COVID-19. Biogen will help employees who wish to volunteer connect with the project. The initial volunteers are among the first people in Massachusetts to be diagnosed with and recover from COVID-19, as well as close contacts of those individuals.

• In April 2020 the previously announced collaboration between Biogen and Sangamo Therapeutics, Inc. (Sangamo) to develop gene regulation therapies for Alzheimer’s disease, Parkinson’s disease, neuromuscular disease, and other neurological diseases became effective. The companies will leverage Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases. Upon closing of this transaction, Biogen paid Sangamo $225 million for the purchase of new Sangamo stock, or approximately 24 million shares at $9.21 per share, and will pay a $125 million license fee in the second quarter of 2020. In addition, Biogen may pay Sangamo up to $2.37 billion in other milestone payments as well as tiered high single digit to sub-teen double-digit royalties.

• In April 2020 Biogen delivered an encore presentation of the Phase 3 topline results for aducanumab at the virtual AAT-AD/PDTM focus meeting. The data in this presentation were previously presented at the Clinical Trials on Alzheimer’s Disease (CTAD) annual congress in December 2019. 7

• In March 2020 the first patient was dosed in the global clinical study, DEVOTE, which is evaluating the safety, tolerability, and potential for even greater efficacy of SPINRAZA when administered at a higher dose than currently approved for the treatment of spinal muscular atrophy (SMA). The Phase 2/3 randomized, controlled, dose-escalating study will be conducted at approximately 50 sites around the world and aims to enroll individuals of all ages with SMA.

• In March 2020 Biogen received the topline data from OPUS, a randomized Phase 2 study exploring the efficacy, safety, and tolerability of natalizumab as an adjunctive therapy in adults with drug-resistant focal epilepsy. Though safety data were in-line with the known safety profile of natalizumab, and target engagement as assessed by alpha-4 integrin saturation was achieved, the primary endpoint was not met. As a result, Biogen has decided to discontinue development of natalizumab in drug-resistant focal epilepsy.

• In March 2020 a study on the efficacy and safety of SPINRAZA in teen and adult patients was published in Lancet Neurology, showing clinically meaningful improvements in motor function in a real-world cohort. This study included 139 teens and adults with later-onset SMA (age 16-65 years) from 10 neuromuscular treatment centers in Germany. Patients were followed for 6-14 months and experienced statistically significant increases in HFMSE (Hammersmith Functional Motor Scale Expanded) scores compared to baseline at 6 months, 10 months, and 14 months. Clinically meaningful improvements (≥3 points increase) in HFMSE scores were seen in 28% of patients at 6 months, 35% of patients at 10 months, and 40% of patients at 14 months. The most frequent adverse events were headache, back pain, and nausea.

• In March 2020 the first patient was dosed in the aducanumab re-dosing study, EMBARK, in line with Biogen’s commitment to offer aducanumab to eligible patients who were previously in aducanumab clinical studies. EMBARK is a global re-dosing clinical study designed to evaluate aducanumab in eligible Alzheimer’s disease patients who were actively enrolled in aducanumab studies (PRIME, EVOLVE, EMERGE, and ENGAGE) in March 2019.

• In March 2020 Biogen completed its acquisition of BIIB118 from Pfizer. BIIB118 is a novel CNS-penetrant small molecule inhibitor of casein kinase 1 (CK1), for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases. In particular, Biogen plans to develop the Phase 1 asset for the treatment of sundowning in Alzheimer’s disease and irregular sleep wake rhythm disorder in Parkinson’s disease. The purchase included an upfront payment of $75 million with up to $635 million in potential additional development and commercialization milestone payments, as well as tiered royalties in the high single digits to sub-teens.

Conference Call and Webcast

The Company’s earnings conference call for the first quarter will be broadcast via the internet at 8:00 a.m. ET on April 22, 2020, and will be accessible through the Investors section of Biogen’s website, www.biogen.com. Supplemental information in the form of a 8 slide presentation is also accessible at the same location on the internet and will be subsequently available on the website for at least one month.