10-QPeriod: Q2 FY2020

BIOGEN INC. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 22, 2020For Securities:BIIB

Summary

Biogen Inc. reported solid financial results for the second quarter of 2020, with total revenues reaching $3,681.6 million, a 1.8% increase year-over-year. Diluted earnings per share (EPS) saw a significant increase of 22.2% to $9.59. This growth was driven by a notable increase in "Other revenues," primarily due to a $329.4 million payment related to an intellectual property license. Despite a slight decrease in product revenues, mainly from MS and biosimilar products, the company's overall performance remained strong, supported by increased R&D investments, including a substantial charge related to the Sangamo collaboration. The company also provided updates on key strategic developments, including the completion of the Biologics License Application (BLA) submission for aducanumab for Alzheimer's disease to the FDA. However, the TECFIDERA business faces ongoing patent litigation with potential generic entry, which could impact future sales. The company's financial position remains robust, with ample cash reserves and a significant share repurchase program in place, demonstrating confidence in its ongoing operations and future prospects.

Financial Highlights

54 data points
Beta

Revenue

$3.68B

88.8% Gross Margin

Net Income

$1.54B

41.9% Net Margin

EPS (Diluted)

$9.59

Total Assets

$25.51B

Cash & Equivalents

$2.38B

Free Cash Flow

$1.84B

Financial Statements
Beta
Revenue$3.68B
Cost of Revenue$411.10M
Gross Profit$3.27B
SG&A Expenses$555.10M
Operating Expenses$1.71B
Operating Income$1.97B
Interest Expense$66.00M
Net Income$1.54B
EPS (Basic)$9.60
EPS (Diluted)$9.59
Shares Outstanding (Basic)160.60M
Shares Outstanding (Diluted)160.90M

Key Highlights

  • 1Total revenues increased by 1.8% to $3,681.6 million in Q2 2020, driven by a surge in "Other revenues" from an IP license payment.
  • 2Diluted EPS grew significantly by 22.2% to $9.59 for Q2 2020 compared to the prior year.
  • 3Product revenues saw a slight decline of 2.9% to $2,795.7 million, mainly due to decreases in Multiple Sclerosis (MS) and biosimilar products.
  • 4Research and Development (R&D) expenses increased by 33.6% to $647.6 million, largely due to a $208.0 million charge from the Sangamo collaboration.
  • 5The company completed the submission of a Biologics License Application (BLA) to the FDA for aducanumab.
  • 6Biogen repurchased approximately 9.0 million shares for $2.8 billion in Q2 2020 as part of its ongoing share repurchase program.
  • 7TECFIDERA faces ongoing patent litigation, with potential generic entry posing a risk to future sales.

Frequently Asked Questions

The primary driver for the revenue increase in the second quarter of 2020 was a significant rise in "Other revenues." This was largely attributed to a $329.4 million payment received for the delivery of a license for certain manufacturing-related intellectual property to a contract manufacturing customer. This one-time event bolstered overall revenue despite a slight dip in product revenues.

Biogen is involved in patent litigation concerning TECFIDERA. A U.S. District Court ruled that the asserted claims of the '514 Patent are invalid. Biogen has appealed this decision and obtained an interim injunction against Mylan from launching a generic version pending appeal. However, the company anticipates market entry of a generic TECFIDERA product before the patent expires in February 2028, which is expected to adversely impact TECFIDERA sales and the company's results of operations.

The COVID-19 pandemic has had varied impacts. The company experienced an acceleration of sales in Q1 2020 due to customers stocking up, which then adversely affected Q2 2020 sales as customers utilized this inventory. Certain products administered in clinical settings, like TYSABRI and SPINRAZA, saw revenue impacts due to site of care closures and patient delays in treatment. R&D activities have also faced timeline impacts, with some trials delayed or paused. Biogen is implementing remote work and other measures to mitigate these effects.

Biogen, along with its collaboration partner Eisai, announced the completion of the submission of a Biologics License Application (BLA) to the FDA for aducanumab, an anti-amyloid beta antibody candidate for Alzheimer's disease. This submission was based on clinical data from Phase 3 and Phase 1b studies. The company also initiated a re-dosing clinical study for eligible patients.