Business Overview
Biogen is a global biopharmaceutical company focused on discovering, developing, and delivering innovative therapies for people living with serious and complex diseases worldwide. The company boasts a broad portfolio of medicines to treat multiple sclerosis (MS), the first approved treatment for spinal muscular atrophy (SMA), co-developed treatments to address Alzheimer's disease, and the first approved treatment to target a genetic cause of amyotrophic lateral sclerosis (ALS). Through its 2023 acquisition of Reata, Biogen now markets the first and only drug approved in the U.S. and the E.U. for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older.Biogen's diversified product portfolio includes TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI, and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; SKYCLARYS for the treatment of Friedreich's Ataxia; QALSODY for the treatment of ALS; and FUMADERM for the treatment of severe plaque psoriasis. The company also has collaborations with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease and Sage on the commercialization of ZURZUVAE for the treatment of postpartum depression (PPD). Additionally, Biogen has certain business and financial rights with respect to RITUXAN, RITUXAN HYCELA, GAZYVA, OCREVUS, LUNSUMIO, and COLUMVI, through its collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.
Biogen's diversification efforts extend to its biosimilars business, where it commercializes a portfolio of biosimilars of advanced biologics, including BENEPALI, IMRALDI, and FLIXABI in certain countries in Europe, as well as BYOOVIZ in the U.S. and certain international markets. The company continues to develop a potential biosimilar product, SB15, a proposed aflibercept biosimilar referencing EYLEA.
Financials
Biogen's financial performance showcases its ability to navigate the evolving industry landscape. For the full year 2023, the company reported annual net income of $1,161,100,000, annual revenue of $9,835,600,000, annual operating cash flow of $1,547,200,000, and annual free cash flow of $1,235,800,000.In the first quarter of 2024, Biogen reported total revenue of $2,290.5 million, a decrease of 7.0% compared to the same period in the prior year. This decline was primarily driven by a 2.9% decrease in product revenue, which totaled $1,711.9 million. The company's multiple sclerosis (MS) revenue decreased by 4.4% to $1,075.9 million, while its rare disease revenue decreased by 4.4% to $423.9 million. These declines were partially offset by the contribution of $78.0 million in revenue from SKYCLARYS, the company's newly acquired treatment for Friedreich's Ataxia.
Biogen's non-GAAP cost of sales, excluding amortization and impairment of acquired intangible assets, improved by 5 percentage points to 22% of total revenue in the first quarter of 2024. This was driven by a more favorable product mix, as revenue from new product launches replaced lower-margin contract manufacturing revenue, and lower idle capacity charges.
Non-GAAP research and development (R&D) expense decreased by 20.6% in the first quarter of 2024, primarily due to savings achieved from the company's Fit for Growth program and the prioritization of its R&D portfolio. Non-GAAP selling, general, and administrative (SG&A) expense decreased by 3.9% in the same period, primarily due to cost reductions realized through the Fit for Growth program, partially offset by increased operational spending on sales and marketing activities to support the launches of LEQEMBI and SKYCLARYS.
These cost optimization efforts, combined with the revenue performance, contributed to a 24% increase in non-GAAP operating income and an improvement in non-GAAP operating margin to 31% in the first quarter of 2024, compared to 23% in the prior-year period.
Geographic and Product Diversification
Biogen's revenue is diversified across geographic regions and product categories. In the first quarter of 2024, the company generated 32.6% of its total product revenue from the United States and 42.1% from the rest of the world.Within the MS franchise, TECFIDERA revenue decreased by 7.4% globally, driven by a decline in demand due to generic competition in North America, Brazil, and certain E.U. countries. VUMERITY revenue increased by 17.8% globally, primarily due to an increase in demand and favorable pricing dynamics in the U.S. TYSABRI revenue decreased by 8.8%, mainly due to increased competition and higher discounts and allowances in the U.S.
In the rare disease segment, SPINRAZA revenue decreased by 35.0% in the rest of the world, primarily due to the timing of shipments, which the company expects to normalize throughout the remainder of 2024. This decline was partially offset by a 1.2% increase in U.S. SPINRAZA revenue, driven by favorable net pricing. SKYCLARYS, the company's newly acquired treatment for Friedreich's Ataxia, contributed $78.0 million in revenue in the first quarter of 2024, including $73.0 million from the U.S. and $5.0 million from the E.U., where the product was approved and launched during the quarter.
Biogen's biosimilars revenue increased by 2.3% globally, primarily due to favorable channel dynamics, partially offset by decreased pricing due to competitive pressures.
Revenue from Biogen's anti-CD20 therapeutic programs, which includes royalty revenue on sales of OCREVUS and the company's share of pre-tax profits in the U.S. for RITUXAN, GAZYVA, and LUNSUMIO, decreased by 1.4% to $394.0 million in the first quarter of 2024.
Outlook
Biogen is reaffirming its expectation of full-year 2024 non-GAAP diluted earnings per share of between $15 and $16, which reflects expected growth of approximately 5% at the midpoint of the range compared to 2023. The company's previous assumptions to its guidance, including those related to potential R&D success milestone or opt-in payments, remain unchanged.Biogen recently announced the completion of a sale of one of its two priority review vouchers for $103 million. The company expects to earmark these proceeds for business investment or to support business development opportunities as they arise.
Risks and Challenges
Biogen faces several risks and challenges common to the biopharmaceutical industry, including competition from new originator therapies, generics, prodrugs, and biosimilars of existing products, as well as products approved under abbreviated regulatory pathways. The company also faces risks related to pricing and reimbursement pressures, the successful development and commercialization of new products, and the integration and optimization of its recent acquisition of Reata.Additionally, Biogen's operations are subject to the risks of doing business internationally, such as the impact of public health epidemics, geopolitical events, supply chain disruptions, and foreign currency exchange rate fluctuations.