10-QPeriod: Q3 FY2017

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2017

Filed October 24, 2017For Securities:BIIB

Summary

Biogen Inc. reported solid financial results for the third quarter and first nine months of 2017, demonstrating revenue growth and improved profitability. Total revenues for the third quarter increased by 4.1% year-over-year to $3.08 billion, driven by strong performance in SPINRAZA and revenues from anti-CD20 therapeutic programs, which offset the elimination of hemophilia business revenues post-spin-off. Diluted earnings per share saw a significant increase of 22.9% to $5.79 for the quarter, reflecting improved operational efficiencies and a decrease in overall costs and expenses. The company continued to invest in its core growth areas, particularly in neurology and neurodegenerative diseases, with key developments in SPINRAZA's regulatory approvals and OCREVUS's market launches. While the company reported strong operational cash flows and maintained a healthy cash position, significant cash outflows were noted for share repurchases, a substantial payment related to TECFIDERA intellectual property, and milestone payments for new drug candidates. The spin-off of the hemophilia business was completed in February 2017, with its results only included up to January 31, 2017.

Financial Highlights

51 data points
Beta

Revenue

$3.08B

88.0% Gross Margin

Net Income

$1.23B

39.8% Net Margin

EPS (Diluted)

$5.79

Total Assets

$23.07B

Cash & Equivalents

$1.55B

Free Cash Flow

$1.40B

Financial Statements
Beta
Revenue$3.08B
Cost of Revenue$370.00M
Gross Profit$2.71B
SG&A Expenses$433.40M
Operating Expenses$1.42B
Operating Income$1.65B
Interest Expense$61.80M
Net Income$1.23B
EPS (Basic)$5.80
EPS (Diluted)$5.79
Shares Outstanding (Basic)211.40M
Shares Outstanding (Diluted)211.80M

Key Highlights

  • 1Total revenues increased by 4.1% to $3.08 billion in Q3 2017 compared to Q3 2016, driven by SPINRAZA and anti-CD20 therapeutic programs.
  • 2Diluted earnings per share (EPS) rose by 22.9% to $5.79 in Q3 2017 compared to the prior year period.
  • 3Research and development expenses decreased by 15.6% in Q3 2017, contributing to improved operating income.
  • 4The company completed the spin-off of its hemophilia business (Bioverativ Inc.) in February 2017, impacting year-over-year revenue comparisons.
  • 5SPINRAZA received significant regulatory approvals in the EU and Japan during the first nine months of 2017.
  • 6A significant $1.25 billion payment was made to Forward Pharma for TECFIDERA intellectual property licenses.
  • 7Cash, cash equivalents, and marketable securities remained robust at $6.57 billion as of September 30, 2017.

Frequently Asked Questions

The spin-off of Biogen's hemophilia business as Bioverativ Inc. was completed on February 1, 2017. Consequently, the financial results for the hemophilia business are only included in the reported periods through January 31, 2017. This led to a decrease in overall product revenues compared to periods where the hemophilia business was included, but also allowed Biogen to focus on its core neurology and neurodegenerative disease areas. The spin-off also resulted in a net cash contribution of $302.7 million to Bioverativ.

SPINRAZA, for spinal muscular atrophy (SMA), received key approvals in the U.S. (late 2016), EU (June 2017), and Japan (July/September 2017). This led to significant product revenue generation, with $270.9 million in the U.S. and $73.3 million internationally for Q3 2017 alone. The company paid $150.0 million in milestone payments to Ionis Pharmaceuticals related to these approvals, which were capitalized as intangible assets. Biogen expects SPINRAZA to be a significant growth driver.

The increase in revenues from anti-CD20 therapeutic programs, up 28.0% to $406.5 million in Q3 2017, was primarily driven by royalty revenues from OCREVUS, which received FDA approval in March 2017 and subsequently in Australia and Switzerland. This program also includes revenue sharing from RITUXAN and GAZYVA, where Biogen's share of pre-tax profits increased due to higher sales volumes and price increases for these products.

Biogen made several significant cash outflows during the first nine months of 2017. These include: a $1.25 billion payment to Forward Pharma for TECFIDERA intellectual property licenses; a $300 million upfront payment to Bristol-Myers Squibb for the BIIB092 license; $120 million upfront payment to Remedy Pharmaceuticals for BIIB093; $900 million in contingent payments related to Fumapharm AG sales milestones; $302.7 million net cash contribution to Bioverativ; $1.4 billion for share repurchases; and $636.8 million for property, plant, and equipment purchases, including its Solothurn, Switzerland facility.