10-QPeriod: Q3 FY2022

BIOGEN INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 25, 2022For Securities:BIIB

Summary

Biogen Inc. reported its financial results for the third quarter of 2022, showing a decline in total revenue to $2.51 billion, down 9.7% year-over-year, primarily driven by a 11.0% decrease in product revenue. This decline was largely attributed to lower sales of its Multiple Sclerosis (MS) products, particularly TECFIDERA, due to generic competition, and a decrease in SPINRAZA revenue affected by foreign currency exchange and increased competition. Despite the revenue dip, Biogen reported a significant increase in diluted earnings per share to $7.84, a 253.2% jump from the prior year's $2.22, largely due to a substantial gain from the sale of its building and reduced operating expenses, including cost savings initiatives and the substantial elimination of the ADUHELM commercial infrastructure. The company's balance sheet strengthened, with cash, cash equivalents, and marketable securities increasing to $5.8 billion. Biogen also continued its share repurchase program, repurchasing $250 million of its stock in the quarter. Key strategic developments include the progress of lecanemab, with a favorable PDUFA action date of January 6, 2023, and positive Phase 3 data, which could be a significant catalyst for future growth. However, the company faces ongoing challenges with ADUHELM, as the CMS National Coverage Decision limits coverage to clinical trial participants, significantly reducing expected demand.

Financial Highlights

53 data points
Beta

Revenue

$2.51B

81.3% Gross Margin

Net Income

$1.13B

45.2% Net Margin

EPS (Diluted)

$7.84

Total Assets

$24.85B

Cash & Equivalents

$3.68B

Free Cash Flow

$601.90M

Financial Statements
Beta
Revenue$2.51B
Cost of Revenue$469.50M
Gross Profit$2.04B
SG&A Expenses$563.30M
Operating Expenses$1.14B
Interest Expense$59.90M
Net Income$1.13B
EPS (Basic)$7.86
EPS (Diluted)$7.84
Shares Outstanding (Basic)144.40M
Shares Outstanding (Diluted)144.80M

Key Highlights

  • 1Total revenue decreased by 9.7% to $2.51 billion in Q3 2022, primarily due to a 11.0% drop in product revenue, largely from MS products (TECFIDERA, AVONEX) facing generic and market competition.
  • 2Diluted earnings per share (EPS) surged by 253.2% to $7.84 in Q3 2022, benefiting from a $503.7 million pre-tax gain on the sale of a building and significant reductions in R&D and SG&A expenses.
  • 3The company generated $1.56 billion in cash flow from operating activities for the first nine months of 2022, and ended the period with $5.77 billion in cash, cash equivalents, and marketable securities.
  • 4Biogen completed the sale of its 49.9% equity interest in Samsung Bioepis for approximately $1.0 billion cash at closing, with an additional $1.3 billion expected over two years.
  • 5ADUHELM sales are expected to be minimal following the CMS decision to cover the treatment only for patients in clinical trials, leading Biogen to significantly reduce its commercial infrastructure for the drug.
  • 6Progress continues on lecanemab with FDA acceptance of the BLA for Priority Review and positive Phase 3 data, with a PDUFA action date set for January 6, 2023.
  • 7Biogen is executing cost-saving initiatives, expecting to incur $130-150 million in restructuring charges, primarily related to workforce reductions and operational efficiencies.

Frequently Asked Questions

The primary reason for the revenue decline is the significant impact of generic competition on TECFIDERA sales, particularly in the U.S. Additionally, SPINRAZA revenue was affected by unfavorable foreign currency exchange rates and increased competition, while other MS products like AVONEX saw reduced demand as patients switch to newer, oral therapies. Biosimilar revenue also decreased due to pricing pressures and currency fluctuations.

The substantial increase in EPS was driven by several factors. A significant pre-tax gain of $503.7 million from the sale of its building in Cambridge, MA, boosted net income. Additionally, Biogen implemented cost-saving initiatives, leading to a decrease in research and development (R&D) and selling, general, and administrative (SG&A) expenses. Notably, the company significantly reduced its ADUHELM commercial infrastructure, contributing to lower SG&A costs.

The outlook for ADUHELM is significantly impacted by the CMS National Coverage Decision, which limits Medicare coverage to patients enrolled in approved clinical trials. This has drastically reduced expected demand for ADUHELM, leading Biogen to substantially eliminate its commercial infrastructure for the drug. The company will continue to fund certain regulatory and R&D activities for ADUHELM, including confirmatory trials.

Biogen highlighted positive developments for lecanemab, an Alzheimer's disease candidate, with the FDA accepting its Biologics License Application (BLA) for Priority Review and positive Phase 3 data announced. The PDUFA action date is January 6, 2023. Other pipeline updates include the initiation of Phase 3 studies for BIIB122 (DNL151) for Parkinson's disease and continued development of other candidates like BIIB059 and BIIB124.