10-QPeriod: Q1 FY2017

BIOGEN INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 25, 2017For Securities:BIIB

Summary

Biogen Inc. reported first-quarter 2017 results showing a 3.1% increase in total revenues to $2.81 billion, primarily driven by growth in TECFIDERA and TYSABRI sales, along with the contribution of SPINRAZA. However, net income attributable to Biogen Inc. decreased by 23% to $747.6 million, or $3.46 per diluted share, compared to the prior year period. This decline was significantly impacted by a substantial increase in "Cost and expenses," largely due to $353.6 million in impairment and amortization charges related to TECFIDERA intellectual property. The company also completed the spin-off of its hemophilia business, Bioverativ Inc., on February 1, 2017, which affected year-over-year comparisons. Despite the decrease in net income, Biogen maintained a strong liquidity position with $5.7 billion in cash, cash equivalents, and marketable securities as of March 31, 2017. Key developments include a positive opinion from the European Medicines Agency for SPINRAZA and the FDA approval of OCREVUS for multiple sclerosis. Investors should monitor the ongoing competitive landscape in the MS market and the impact of the recent significant expenses on future profitability.

Financial Highlights

51 data points
Beta

Revenue

$2.81B

86.3% Gross Margin

Net Income

$747.60M

26.6% Net Margin

EPS (Diluted)

$3.46

Total Assets

$21.20B

Cash & Equivalents

$924.00M

Free Cash Flow

$25.20M

Financial Statements
Beta
Revenue$2.81B
Cost of Revenue$384.60M
Gross Profit$2.43B
SG&A Expenses$498.70M
Operating Expenses$1.79B
Operating Income$1.02B
Interest Expense$63.40M
Net Income$747.60M
EPS (Basic)$3.47
EPS (Diluted)$3.46
Shares Outstanding (Basic)215.60M
Shares Outstanding (Diluted)215.90M

Key Highlights

  • 1Total revenues increased by 3.1% to $2.81 billion for the three months ended March 31, 2017, compared to the prior year period.
  • 2Net income attributable to Biogen Inc. decreased by 23% to $747.6 million, or $3.46 per diluted share, compared to $970.9 million, or $4.43 per diluted share, in the prior year period.
  • 3The company completed the spin-off of its hemophilia business, Bioverativ Inc., on February 1, 2017.
  • 4Cost and expenses increased significantly by 32.5% to $1.79 billion, primarily due to $353.6 million in impairment and amortization charges related to TECFIDERA intellectual property.
  • 5Cash, cash equivalents, and marketable securities totaled $5.71 billion as of March 31, 2017.
  • 6SPINRAZA received a positive opinion from the European Medicines Agency's CHMP for marketing authorization in the EU.
  • 7OCREVUS (Ocrelizumab) was approved by the FDA in March 2017 for the treatment of relapsing and primary progressive multiple sclerosis.

Frequently Asked Questions

The primary driver for the substantial increase in total cost and expenses was the inclusion of $353.6 million in impairment and amortization charges related to Biogen's intellectual property for TECFIDERA, acquired in January 2017 through a settlement and license agreement with Forward Pharma.

The spin-off of Biogen's hemophilia business, Bioverativ Inc., on February 1, 2017, means that the financial results for the first quarter of 2017 only include Bioverativ's financial results up to January 31, 2017. This affects year-over-year comparisons, particularly for product revenues that were previously part of the hemophilia business, such as ALPROLIX and ELOCTATE. The spin-off also involved a net cash contribution of $302.7 million to Bioverativ.

Biogen obtained U.S. and rest of world licenses to Forward Pharma's intellectual property related to TECFIDERA in January 2017, paying $1.25 billion. On March 31, 2017, a U.S. intellectual property dispute concerning TECFIDERA was decided in Biogen's favor. Forward Pharma has announced its intention to appeal this decision. This favorable outcome led to an impairment charge to adjust the carrying value of the acquired U.S. asset to fair value.

Total product revenues increased by 3.1% to $2.38 billion. This was driven by a 14.3% increase in worldwide TYSABRI revenues and contributions from BENEPALI and SPINRAZA. However, revenues from the hemophilia products (ALPROLIX and ELOCTATE) were negatively impacted by the spin-off. TECFIDERA revenues saw a slight increase driven by price increases in the U.S. and volume growth internationally, while Interferon revenues continued to decline due to patient transitions to other therapies.