On October 30, 2024 Biogen Inc. (NASDAQ: BIIB) reported third quarter 2024 financial results (Press release, Biogen, OCT 30, 2024, View Source [SID1234647534]). Commenting on the quarter, President and Chief Executive Officer Christopher A. Viehbacher said:
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"In the third quarter Biogen made continued progress toward our goal of returning to sustainable growth. We continue to see momentum with ongoing product launches and we are increasingly excited about the potential of our pipeline. This quarter we had several significant positive developments in key areas of our late-stage pipeline which we believe underscore the potential value for both patients and shareholders. Importantly, the positive results for dapirolizumab pegol, as well as recent presentations of felzartamab data in IgAN, bolster our efforts to develop an industry-leading pipeline in immunology, where we are building upon data insights and increasing our capabilities to prepare for potential future launches."
Financial Highlights
Q3 ’24 Q3 ’23 △
r (CC*)
Total Revenue (in millions) $2,466 $2,530 (3)% (3)%
GAAP diluted EPS $2.66 $(0.47) 666% N/A
Non-GAAP diluted EPS $4.08 $4.36 (6)% N/A
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period.
N/A = not applicable.
* 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) Q3 ’24 Q3 ’23 △
r (CC*)
Multiple sclerosis (MS) product revenue(1)
$1,054 $1,159 (9)% (9)%
Rare disease revenue(2)
$495 $450 10% 10%
Biosimilars revenue $197 $194 1% —%
Other product revenue(3)
$24 $2 NMF NMF
Total product revenue $1,769 $1,805 (2)% (2)%
Revenue from anti-CD20 therapeutic programs $446 $421 6% 6%
Contract manufacturing, royalty and other revenue $250 $304 (18)% (19)%
Total revenue $2,466 $2,530 (3)% (3)%
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period. Numbers may not foot or recalculate due to rounding.
NMF = no meaningful figure.
(1) Multiple sclerosis includes TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA.
(2) Rare disease includes SPINRAZA, SKYCLARYS and QALSODY.
(3) Other includes ADUHELM, FUMADERM and ZURZUVAE.
•Third quarter 2024 ZURZUVAE revenue was approximately $22 million.
Expense Summary
(in millions) Q3 ’24 Q3 ’23 △
GAAP cost of sales*
$639 $660 3%
% of Total Revenue 26% 26%
Non-GAAP cost of sales*
$593 $660 10%
% of Total Revenue 24% 26%
GAAP R&D expense $543 $736 26%
Non-GAAP R&D expense $491 $539 9%
GAAP SG&A expense $588 $788 25%
Non-GAAP SG&A expense $556 $553 (1)%
Note: Percent changes represented as favorable/(unfavorable) versus the prior year period
* Excluding amortization and impairment of acquired intangible assets
•The decrease in third 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
2
product launches and decrease in contract manufacturing revenue, as well as lower idle capacity charges.
•In the third quarter 2024 as compared to the third quarter of 2023, the decrease in GAAP R&D of approximately $194 million was primarily driven by approximately $197 million of equity-based compensation expense recognized in 2023 related to the Reata Pharmaceuticals, Inc. (Reata) acquisition, cost-reduction measures realized in 2024 in connection with the Company’s R&D prioritization and Fit for Growth initiatives, as well as higher spend on clinical trials and close out costs incurred during 2023, partially offset by approximately $43 million of equity-based compensation expense recognized in 2024 related to the Human Immunology Biosciences, Inc. (HI-Bio) acquisition.
•In the third quarter 2024 as compared to the third quarter of 2023, the decrease in Non-GAAP R&D of approximately $48 million was primarily due to cost-reduction measures realized in 2024 in connection with the Company’s R&D prioritization and Fit for Growth initiatives, as well as higher spend on clinical trials and close out costs incurred during 2023.
•In the third quarter 2024 as compared to the third quarter of 2023, the decrease in GAAP SG&A expense of approximately $200 million was primarily due to approximately $196 million of equity-based compensation expense recognized in 2023 related to the acquisition of Reata and cost-reduction measures realized in 2024 in connection with the Company’s Fit for Growth initiative.
•In the third quarter 2024 as compared to the third quarter of 2023, the increase in Non-GAAP SG&A expense of approximately $3 million was primarily due to increased commercialization spend related to new product launches, partially offset by savings achieved from the Company’s Fit for Growth initiative.
Other Financial Highlights
•Third quarter 2024 GAAP and Non-GAAP collaboration profit sharing was a net expense of approximately $69 million, which includes approximately $60 million related to Biogen’s collaboration with Samsung Bioepis, and approximately $9 million related to Biogen’s collaboration with Sage Therapeutics, Inc. (Sage) and the commercialization of ZURZUVAE in the U.S.
•Third quarter 2024 GAAP other expense was approximately $15 million, primarily driven by net interest expense, partially offset by net realized and unrealized gains on strategic equity investments of approximately $39 million. Third quarter 2024 Non-GAAP other expense was approximately $54 million, primarily driven by net interest expense.
•Third quarter 2024 GAAP and Non-GAAP effective tax rates were 13.9% and 13.8%, respectively. Third quarter 2023 GAAP and Non-GAAP effective tax rates were 51.6% and 14.7%, respectively.
Financial Position
•Third quarter 2024 net cash flow from operations was approximately $936 million. Capital expenditures were approximately $35 million, and free cash flow, defined as net cash flow from operations less capital expenditures, was approximately $901 million.
•As of September 30, 2024, Biogen had cash, cash equivalents, and marketable securities totaling approximately $1.7 billion and approximately $6.3 billion in total debt, resulting in net debt of approximately $4.6 billion.
•No shares of the Company’s common stock were repurchased in the third quarter of 2024. As of September 30, 2024, there was approximately $2.1 billion remaining under the share repurchase program authorized in October 2020.
•For the third quarter of 2024 the Company’s weighted average diluted shares were approximately 146 million.
Full Year 2024 Financial Guidance
For the full year 2024, Biogen now expects a Non-GAAP diluted EPS guidance range as follows:
Prior FY 2024 Guidance Updated FY 2024 Guidance
Non-GAAP diluted EPS
$15.75 to $16.25
Reflecting growth of ~9% at the mid-point*
$16.10 to $16.60
Reflecting growth of ~11% at the mid-point*
*Versus reported full year 2023
Biogen continues to expect total revenue to decline by a low-single digit percentage, with 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 expects operating income to grow at a high-teen percentage with mid-single digit percentage point operating margin improvement. 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 and R&D prioritization initiatives.
This financial guidance does not include any impact from potential acquisitions or business development transactions or pending and future litigation or any impact of potential tax or healthcare reform, as all are hard to predict.
This guidance also assumes that foreign exchange rates as of October 25, 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.
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 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.
Key Recent Events
•In October, Biogen and Sage decided they will not pursue further development for zuranolone as a treatment for major depressive disorder.
Conference Call and Webcast
The Company’s earnings conference call for the third quarter will be broadcast via the internet at 8:30 a.m. ET on October 30, 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.