10-QPeriod: Q2 FY2016

BIOGEN INC. Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 21, 2016For Securities:BIIB

Summary

Biogen Inc. reported strong financial results for the quarter and six months ended June 30, 2016. Total revenues increased by 11.7% year-over-year for the quarter, driven by robust growth in product revenues, notably from TECFIDERA and TYSABRI, alongside contributions from newer products like ELOCTATE, ALPROLIX, and BENEPALI. Diluted Earnings Per Share (EPS) saw a significant increase of 21.9% for the quarter. The company generated substantial operating cash flow and maintained a strong liquidity position with over $7.2 billion in cash, cash equivalents, and marketable securities. A key strategic development during the period was the announced intention to spin off the hemophilia business into an independent company, expected to be completed in early 2017. This move signals a strategic refocusing on core therapeutic areas. Biogen also advanced its pipeline with key regulatory developments, including the approval of ZINBRYTA for relapsing MS in both the US and EU, and continued progress with OCREVUS and aducanumab. Investors should monitor the ongoing patent litigation and competition in the multiple sclerosis market, which remain critical factors.

Financial Highlights

52 data points
Beta

Revenue

$2.89B

87.2% Gross Margin

Net Income

$1.05B

36.3% Net Margin

EPS (Diluted)

$4.79

Total Assets

$21.51B

Cash & Equivalents

$1.36B

Free Cash Flow

$861.40M

Financial Statements
Beta
Revenue$2.89B
Cost of Revenue$370.30M
Gross Profit$2.52B
SG&A Expenses$492.40M
Operating Expenses$1.43B
Operating Income$1.46B
Interest Expense$65.90M
Net Income$1.05B
EPS (Basic)$4.79
EPS (Diluted)$4.79
Shares Outstanding (Basic)219.10M
Shares Outstanding (Diluted)219.40M

Key Highlights

  • 1Total revenues increased by 11.7% to $2,894.2 million for the three months ended June 30, 2016, compared to the prior year period.
  • 2Product revenues, net, grew by 12.2% to $2,466.0 million for the three months ended June 30, 2016, driven by TECFIDERA, TYSABRI, and hemophilia products.
  • 3Diluted earnings per share attributable to Biogen Inc. increased by 21.9% to $4.79 for the three months ended June 30, 2016.
  • 4The company announced its intention to spin off its hemophilia business into an independent, publicly traded company, expected in early 2017.
  • 5Cash, cash equivalents, and marketable securities totaled $7,274.4 million as of June 30, 2016, indicating a strong liquidity position.
  • 6ZINBRYTA received FDA approval for relapsing MS in May 2016 and EMA approval in July 2016.
  • 7Significant ongoing patent litigation and intellectual property challenges were noted, particularly concerning TECFIDERA and other key products.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in product sales, with TECFIDERA and TYSABRI showing significant year-over-year increases. Newer products like ELOCTATE, ALPROLIX, and BENEPALI also contributed to the overall revenue increase.

The spin-off of the hemophilia business is a strategic decision intended to allow Biogen to focus on its core therapeutic areas, particularly neurological diseases and autoimmune disorders. This separation is expected to create two more focused companies, potentially unlocking value for shareholders.

Key risks include intense competition in the multiple sclerosis market, patent litigation and challenges (e.g., concerning TECFIDERA), pricing pressures from governments and payors, potential regulatory changes, and the dependence on a few key products for a significant portion of revenue. The introduction of biosimilars and new competing therapies also pose a risk.

Biogen maintains a strong liquidity position, with over $7.2 billion in cash, cash equivalents, and marketable securities as of June 30, 2016. The company primarily finances its operations through cash flow from operations and has access to additional financing if needed. They also have an active share repurchase program.