10-QPeriod: Q1 FY2018

BIOGEN INC. Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 24, 2018For Securities:BIIB

Summary

Biogen Inc. reported strong financial performance for the first quarter of 2018, with total revenues increasing by 11.4% year-over-year to $3,131.1 million. This growth was primarily driven by robust sales of SPINRAZA and BENEPALI, along with increased revenues from anti-CD20 therapeutic programs, notably OCREVUS royalties. Diluted earnings per share (EPS) saw a significant jump of 60.1% to $5.54. The company also experienced a notable decrease in total cost and expenses, largely due to lower amortization of acquired intangible assets compared to the prior year, which included an impairment charge. Operationally, Biogen benefited from the recent Tax Cuts and Jobs Act of 2017, which resulted in a lower effective tax rate. The company maintained a strong cash position, generating $1,457.1 million in operating cash flows and ending the quarter with $7.1 billion in cash, cash equivalents, and marketable securities. Management highlighted ongoing investments in research and development, particularly in early and late-stage programs for neurological and neurodegenerative diseases, alongside strategic acquisitions and collaborations to bolster its pipeline.

Financial Highlights

51 data points
Beta

Revenue

$3.13B

85.8% Gross Margin

Net Income

$1.17B

37.5% Net Margin

EPS (Diluted)

$5.54

Total Assets

$26.09B

Cash & Equivalents

$4.11B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$3.13B
Cost of Revenue$446.00M
Gross Profit$2.69B
SG&A Expenses$501.30M
Operating Expenses$1.60B
Operating Income$1.53B
Interest Expense$50.50M
Net Income$1.17B
EPS (Basic)$5.55
EPS (Diluted)$5.54
Shares Outstanding (Basic)211.40M
Shares Outstanding (Diluted)211.70M

Key Highlights

  • 1Total revenues increased by 11.4% to $3,131.1 million in Q1 2018, driven by strong product sales and anti-CD20 programs.
  • 2Diluted EPS grew significantly by 60.1% to $5.54 compared to the prior year period.
  • 3Cost and expenses decreased by 10.6%, primarily due to lower amortization of acquired intangible assets, partially offset by increased R&D and cost of sales.
  • 4SPINRAZA and biosimilar revenues (BENEPALI, FLIXABI) showed substantial growth.
  • 5The company's effective tax rate decreased to 21.6% due to the Tax Cuts and Jobs Act of 2017.
  • 6Operating cash flow was robust at $1,457.1 million, and the company ended the quarter with a strong liquidity position of $7.1 billion in cash, cash equivalents, and marketable securities.
  • 7Biogen announced the voluntary worldwide withdrawal of ZINBRYTA for relapsing MS in March 2018.

Frequently Asked Questions

Revenue growth was primarily driven by strong sales from SPINRAZA, a spinal muscular atrophy treatment, and biosimilar products like BENEPALI and FLIXABI. Additionally, revenues from anti-CD20 therapeutic programs, including royalties from OCREVUS, also contributed significantly to the increase.

The Tax Cuts and Jobs Act of 2017 led to a reduction in the U.S. federal statutory tax rate from 35% to 21%. This resulted in a lower effective tax rate for Biogen in Q1 2018 (21.6% compared to 24.2% in Q1 2017), positively impacting net income.

The company anticipates a modest increase in TECFIDERA demand globally in 2018, with expected volume growth in international markets, although this may be offset by declines in the U.S. due to increasing competition. For Interferon products (AVONEX and PLEGRIDY), revenues are expected to continue declining due to competition. TYSABRI is also anticipated to see a decline in demand globally due to competition, particularly from OCREVUS.

In March 2018, Biogen and AbbVie announced the voluntary worldwide withdrawal of ZINBRYTA for relapsing MS due to safety concerns. Additionally, Biogen completed an asset acquisition of BIIB100 (formerly KPT-350) for ALS treatment and entered into a collaboration agreement with Ionis Pharmaceuticals for neurological diseases.