01—Abstract
Summary
Summary of the 10-K filed February 15, 2023. Cited figures are marked; the original filing is the authoritative source.
Biogen's FY2022 10-K (filed February 15, 2023) shows a company in transition: total revenue fell 7.4% to $10.17 billiona, with product revenue down 9.7% to $7.99 billion, driven mainly by generic TECFIDERA erosion (down 26%) and biosimilar competition to RITUXAN.
Diluted EPS nearly doubled to $20.87b, but that was inflated by one-time items, including a roughly $1.5 billion pre-tax gain on the sale of the 49.9% Samsung Bioepis stake and a $503.7 million gain on the 125 Broadway building sale, partly offset by a $917 million litigation settlement charge and $275 million of ADUHELM inventory write-offs after the CMS coverage decision. Underlying operations are under pressure as legacy MS franchises decline. Management expects TECFIDERA and interferon revenue to keep falling in 2023 and guides to flat SPINRAZA and TYSABRI and modest biosimilar growth.
The company has $5.6 billionc in cash and marketable securities against $6.3 billion of long-term notes, and ended the year with $2.1 billion remaining on its buyback authorization after repurchasing roughly $750 million of stock in 2022. Operating cash flow fell 62% to $1.38 billion, partly due to the litigation payment and higher tax payments.
The main investor debates are the pace of the company's pivot to neurology and neuropsychiatry, centered on the January 2023 accelerated approval of LEQEMBI (co-developed with Eisai) and the zuranolone PDUFA date of August 5, 2023, and whether cost-reduction savings of about $1.0 billiond and the planned exploration of strategic options for the biosimilars business can offset revenue erosion. Its ADUHELM setback and the House committee investigation remain overhangs.
02—Key points
Key Highlights
- Total revenue declined 7.4% to $10,173.4 million in 2022 from $10,981.7 million, with product revenue down 9.7% to $7,987.8 million, primarily due to TECFIDERA generic competition and RITUXAN biosimilar pressure.
- Diluted EPS rose to $20.87 from $10.40, but this was inflated by non-recurring items, including a ~$1.5 billion pre-tax gain on the Samsung Bioepis stake sale and a $503.7 million gain on the 125 Broadway building sale.
- A $917.0 million litigation settlement charge (qui tam matter) and $275 million of ADUHELM inventory write-offs following the CMS coverage decision weighed on results and operating cash flow.
- Operating cash flow fell 62% to $1,384.3 million, while cash, equivalents and marketable securities totaled $5,598.5 million against $6,281.0 million of notes payable.
- LEQEMBI received FDA accelerated approval in January 2023; zuranolone (MDD/PPD) has a PDUFA date of August 5, 2023, and tofersen has a PDUFA date of April 25, 2023.
- Management expects continued declines in TECFIDERA and interferon revenue in 2023, flat global TYSABRI and SPINRAZA revenue, and targets about $1.0 billion in cost savings from 2022 initiatives.
- The company repurchased about $750 million of stock in 2022, leaving about $2.1 billion available under its 2020 program, and announced it is exploring strategic options for its biosimilars business in February 2023.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 15, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $10.17B$10.98B | −7.4% |
| Cost of Revenue | $2.28B$2.11B | +8.0% |
| Gross Profit | $7.90B$8.87B | −11.0% |
| SG&A Expenses | $2.40B$2.67B | −10.1% |
| Operating Expenses | $6.58B$9.24B | −28.7% |
| Interest Expense | $246.60M$253.60M | −2.8% |
| Net Income | $3.05B$1.56B | +95.8% |
| EPS (Basic) | $20.96$10.44 | +100.8% |
| EPS (Diluted) | $20.87$10.40 | +100.7% |
| Shares Outstanding (Basic) | 145.30M149.10M | −2.5% |
| Shares Outstanding (Diluted) | 146.00M149.60M | −2.4% |
05—Questions
Frequently Asked Questions
Why did Biogen's diluted EPS nearly double in 2022 even though revenue fell?
The increase was driven mainly by non-recurring gains, not core operations. The largest was a roughly $1.5 billion pre-tax gain from selling the 49.9% Samsung Bioepis stake, plus a $503.7 million gain on the 125 Broadway building sale and lower amortization and impairment charges ($365.9 million vs. $881.3 million in 2021). These were partly offset by a $917 million litigation settlement charge and ADUHELM-related write-offs.
What is driving the decline in product revenue?
The main driver is TECFIDERA, where U.S. and international generic entrants cut revenue 26% to $1,443.9 million. Interferon revenue fell 16.6% as patients moved to higher-efficacy oral therapies, and RITUXAN U.S. sales fell 28.4% in volume due to biosimilar competition. TYSABRI and SPINRAZA were relatively stable.
What are the key near-term catalysts for investors?
The main catalysts are the zuranolone PDUFA date of August 5, 2023 for MDD and PPD, the tofersen PDUFA date of April 25, 2023 for SOD1 ALS, and LEQEMBI's regulatory progress, including the supplemental BLA for traditional approval and reviews in the EU, Japan and China. The company is also exploring strategic options for its biosimilars business, and the ongoing ADUHELM investigations and litigation remain risks.
How strong is Biogen's balance sheet and capital return position?
The company had $5.6 billion in cash, cash equivalents and marketable securities and $6.3 billion in senior notes at year-end 2022, with a $1.0 billion revolving credit facility undrawn. In 2022 it redeemed $1.0 billion of 3.625% notes and repurchased about $750 million of stock, leaving about $2.1 billion available under its buyback authorization. Biogen has not paid cash dividends.
What happened with ADUHELM and how does it affect the outlook?
CMS's April 2022 final national coverage decision restricted Medicare coverage of anti-amyloid antibodies to patients in approved clinical trials, which effectively eliminated ADUHELM demand. Biogen recorded roughly $275 million of inventory and purchase commitment write-offs and about $111 million of idle capacity charges, substantially wound down its commercial infrastructure, and amended its Eisai agreement so Eisai only receives a royalty from 2023. The FDA accelerated approval remains subject to a confirmatory trial, and securities actions and House committee investigations are ongoing.
06—Continue