On April 24, 2024 Biogen Inc. (NASDAQ: BIIB) reported first quarter 2024 financial results (Press release, Biogen, APR 24, 2024, View Source [SID1234642274]). Commenting on the quarter, President and Chief Executive Officer Christopher A. Viehbacher said:
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"We are starting 2024 with an increase in earnings per share and solid execution across our new product launches along with the realization of meaningful cost savings and margin improvement. We see momentum building at a steady pace for LEQEMBI. In particular, we were encouraged that LEQEMBI in-market revenue for the first quarter nearly tripled sequentially and we saw a significant build in month-to-month new patient starts in the first quarter. As the launch progresses and infrastructure develops, we continue to believe in the potential longer-term commercial opportunity in Alzheimer’s disease. In rare disease, the U.S. launch of SKYCLARYS is advancing well and with the E.U. launch underway, we are beginning to realize the value of the Reata transaction. The uptake of ZURZUVAE in postpartum depression and QALSODY in SOD-1 ALS, two areas of significant unmet need, has also been encouraging. With a renewed culture focused on purpose and performance, we are advancing toward our goal of returning to sustainable growth while creating enhanced value for patients and our shareholders."
Financial Highlights
Q1 ’24 Q1 ’23 △
r (CC*)
Total Revenue (in millions) $2,290 $2,463 (7)% (7)%
GAAP diluted EPS $2.70 $2.67 1% —%
Non-GAAP diluted EPS $3.67 $3.40 8% —%
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period.
* Percentage changes in revenue growth at constant currency (CC) are presented excluding the impact of changes in foreign currency exchange rates and hedging gains or losses. Foreign currency revenue values are converted into U.S. Dollars using the exchange rates from the end of the previous calendar year.
A reconciliation of GAAP to Non-GAAP financial measures can be found in Table 4 at the end of this news release.
Revenue Summary
(in millions) Q1 ’24 Q1 ’23 △
r (CC*)
Multiple sclerosis (MS) product revenue(1)
$1,076 $1,125 (4)% (4)%
Rare disease revenue(2)
$424 $443 (4)% (4)%
Biosimilars revenue $197 $192 2% 2%
Other product revenue(3)
$15 $2 538% 542%
Total product revenue $1,712 $1,763 (3)% (3)%
Revenue from anti-CD20 therapeutic programs $394 $399 (1)% (1)%
Contract manufacturing, royalty and other revenue $185 $300 (39)% (40)%
Total revenue $2,290 $2,463 (7)% (7)%
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period. Numbers may not foot or recalculate due to rounding.
(1) Multiple sclerosis includes TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA.
(2) Rare disease includes SPINRAZA, QALSODY and SKYCLARYS.
(3) Other includes ADUHELM, FUMADERM and ZURZUVAE.
•First quarter 2024 ZURZUVAE revenue was approximately $12 million.
Expense Summary
(in millions) Q1 ’24 Q1 ’23 △
GAAP cost of sales*
$542 $663 18%
% of Total Revenue 24% 27%
Non-GAAP cost of sales*
$500 $663 25%
% of Total Revenue 22% 27%
GAAP R&D expense $453 $571 21%
Non-GAAP R&D expense $447 $571 22%
GAAP SG&A expense $582 $605 4%
Non-GAAP SG&A expense $569 $603 6%
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period
* Excluding amortization and impairment of acquired intangible assets
•There were no idle capacity charges in the first quarter of 2024. First quarter 2023 GAAP and Non-GAAP cost of sales includes approximately $45 million of idle capacity charges. The decrease in first quarter 2024 GAAP and Non-GAAP cost of sales as a percentage of total revenue was driven primarily by product mix, particularly the year-over-year increase in revenue from new product launches and decrease in contract manufacturing revenue, as well as less idle capacity charges.
•In the first quarter 2024 as compared to the first quarter of 2023, the decrease in GAAP R&D and SG&A expense of approximately $118 million and $24 million, respectively, and the decrease in Non-GAAP R&D and SG&A expense of approximately $124 million and $33 million, respectively, was primarily due to savings achieved from our Fit for Growth and R&D portfolio prioritization initiatives. First quarter 2023 GAAP and Non-GAAP SG&A expense includes approximately $31 million related to
2
the termination of the co-promotion agreement with Eisai for Biogen’s multiple sclerosis products in Japan.
Other Financial Highlights
•First quarter 2024 GAAP and Non-GAAP collaboration profit sharing was a net expense of $66 million, which includes $61 million related to Biogen’s collaboration with Samsung Bioepis, and $5 million to Sage Therapeutics related to the commercialization of ZURZUVAE in the U.S.
•First quarter 2024 GAAP other expense was $94 million, primarily driven by net interest expense and net unrealized losses on strategic equity investments of $31 million. First quarter 2024 Non-GAAP other expense was $63 million, primarily driven by net interest expense.
•First quarter 2024 GAAP and Non-GAAP effective tax rates were 15.4% and 15.9%, respectively. First quarter 2023 GAAP and Non-GAAP effective tax rates were 11.6% and 13.5%, respectively, and benefited from the resolution of an uncertain tax matter and higher non-cash tax benefits from changes in the value of our equity investments.
Financial Position
•First quarter 2024 net cash flow from operations was $553 million. Capital expenditures were $46 million, and free cash flow, defined as net cash flow from operations less capital expenditures, was $507 million.
•As of March 31, 2024, Biogen had cash, cash equivalents, and marketable securities totaling approximately $1.1 billion and approximately $6.5 billion in total debt, resulting in net debt of approximately $5.5 billion. As of March 31, 2024 $750 million of the 2023 Term Loan which was put in place at the time of the Reata acquisition had been repaid, with the remaining $250 million expected to be repaid during the second quarter of 2024.
•Subsequent to the end of the first quarter of 2024, Biogen received its scheduled installment payment of approximately $437 million from Samsung BioLogics related to Biogen’s sale of its JV equity stake in Samsung Bioepis.
•No shares of the Company’s common stock were repurchased in the first quarter of 2024. As of March 31, 2024, there was $2.1 billion remaining under the share repurchase program authorized in October 2020.
•For the first quarter of 2024 the Company’s weighted average diluted shares were 146 million.
Full Year 2024 Financial Guidance
For the full year 2024, Biogen continues to expect a Non-GAAP diluted EPS guidance range as follows:
Reaffirmed Full Year 2024 Guidance
Non-GAAP diluted EPS
$15.00 to $16.00
Reflecting growth of ~5% at the mid-point*
*Versus reported full year 2023
While total revenue is expected to decline by a low- to mid-single digit percentage, Biogen continues to expect core pharmaceutical revenue, defined as product revenue plus Biogen’s 50% share of net LEQEMBI product revenue and cost of sales, including royalties, to be relatively flat for 2024 compared to 2023 as further declines in multiple sclerosis product revenue are expected to be offset by increases in revenue from new product launches.
Biogen continues to expect an improvement in the cost of sales as a percentage of total revenue for 2024 compared to 2023 driven by product mix and significantly lower idle capacity charges.
For 2024 compared to 2023, Biogen continues to expect operating income to grow at a low-double digit percentage. This is expected to be driven by improved cost of sales as a percentage of revenue, as well as lower operating expenses as a result of the Company’s Fit for Growth program.
This guidance also assumes that foreign exchange rates as of April 19, 2024, will remain in effect for the remainder of the year, net of hedging activities. Other modeling considerations will be provided on the conference call and webcast.
This financial guidance does not include any impact from potential acquisitions or large business development transactions or pending and future litigation, as all are hard to predict, or any impact of potential tax or healthcare reform. Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2024 that could cause any of these assumptions to change and/or actual results to vary from this financial guidance.
Biogen does not provide guidance for GAAP reported financial measures (other than revenue) or a reconciliation of forward-looking Non-GAAP financial measures to the most directly comparable GAAP reported financial measures because the Company is unable to predict with reasonable certainty the financial impact of items such as the transaction, integration, and certain other costs related to acquisitions or large business development transactions; unusual gains and losses; potential future asset impairments; gains and losses from our equity security investments; and the ultimate outcome of pending or future significant litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. For the same reasons, the Company is unable to address the significance of the unavailable information, which could be material to future results.
Conference Call and Webcast
The Company’s earnings conference call for the first quarter will be broadcast via the internet at 8:30 a.m. ET on April 24, 2024 and will be accessible through the Investors section of Biogen’s website, www.biogen.com. Supplemental information in the form of a slide presentation is also accessible at the same location on the internet and will be subsequently available on the website for at least 90 days.