Biogen Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021, compared with 2020 and 2019. This is an annual filing, not a standalone fourth-quarter earnings report. Amounts are in U.S. dollars unless noted.
Business context
Biogen is a global biopharmaceutical company focused on neurology, neurodegenerative diseases and related areas. Its business includes multiple sclerosis (MS) therapies, SPINRAZA for spinal muscular atrophy, the newly launched ADUHELM, biosimilars and revenue-sharing rights in anti-CD20 products with Genentech. Its results remain substantially dependent on established products and collaboration revenue.
Financial results and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Total revenue | $10.982 billion | $13.445 billion | Down 18.3% |
| Product revenue, net | $8.847 billion | $10.692 billion | Down 17.3% |
| Income from operations | $2.841 billion | $4.550 billion | Down 37.6% |
| Net income attributable to Biogen | $1.556 billion | $4.001 billion | Down 61.1% |
| Diluted earnings per share | $10.40 | $24.80 | Down 58.1% |
| Net cash from operating activities | $3.640 billion | $4.230 billion | Down 13.9% |
Operating margin was approximately 25.9%, versus 33.8% in 2020; net margin attributable to Biogen was approximately 14.2%, versus 29.8%. Simple operating cash flow less property, plant and equipment purchases was approximately $3.382 billion in 2021; this is not a company-defined free-cash-flow measure.
- Revenue drivers: MS revenue fell 22.2% to $6.097 billion, chiefly reflecting U.S. TECFIDERA generic competition. SPINRAZA revenue fell 7.2% to $1.905 billion amid competition and pricing pressure. Anti-CD20 program revenue fell 16.1% to $1.659 billion, principally due to RITUXAN biosimilar competition; OCREVUS royalties increased.
- Other products: TYSABRI revenue rose 6.0% to $2.063 billion. Biosimilar revenue rose 4.4% to $831 million. ADUHELM generated just $3 million in product revenue after its U.S. launch in 2021.
- Expenses and unusual items: Total cost and expense declined 8.5% to $8.141 billion. R&D expense dropped 37.3%, mainly because 2020 included large collaboration upfront charges. Cost of sales increased 16.9%, including ADUHELM inventory and purchase-commitment charges; acquired-intangible amortization and impairment increased to $881 million, including $629 million of impairment charges. Other expense included $831 million of unrealized losses on equity securities, contributing to the sharp decline in earnings.
- Cash and debt: Cash, cash equivalents and marketable securities totaled $4.695 billion, up from $3.382 billion. Total borrowings were $7.273 billion, including $999 million due in 2022; cash and securities therefore fell short of borrowings by approximately $2.579 billion. Working capital was $3.558 billion, versus $3.145 billion. The $1.0 billion revolving credit facility was undrawn.
- Capital allocation: Biogen repurchased and retired approximately 6.0 million shares for $1.8 billion in 2021; $2.8 billion remained available under its repurchase program. It paid no cash dividend.
Material changes, outlook and commentary
- U.S. TECFIDERA sales were materially affected by generic entrants; Biogen expected further declines in 2022. A European regulatory-protection dispute also left potential E.U. generic entry a risk.
- Management expected continued declines in interferon revenue, relatively flat global TYSABRI revenue, and increased competition and lower new-patient starts for SPINRAZA in 2022. It anticipated a slight decline in biosimilar revenue and minimal ADUHELM sales in 2022.
- Biogen expected core R&D expense to increase in 2022 as pipeline investment continued, while SG&A costs were expected to decrease with cost-reduction measures. It expected a moderate increase in interest expense. No consolidated 2022 revenue or EPS guidance is provided in the filing text.
- ADUHELM received FDA accelerated approval based on amyloid plaque reduction, with a confirmatory trial required to verify clinical benefit. CMS’s proposed coverage decision would limit Medicare coverage of FDA-approved amyloid-targeting antibodies to qualifying clinical trials; Biogen warned that a final decision no broader than the proposal could adversely affect results. The filing reports inventory and purchase-commitment charges related to ADUHELM and $223 million of ADUHELM inventory at year-end.
- Biogen reported a proposed sale of its Samsung Bioepis equity, agreed in January 2022: $1.0 billion at closing, $1.3 billion deferred in two payments and up to $50 million in commercial milestones. Closing was anticipated in mid-2022, subject to conditions.
- Other pipeline developments were mixed: zuranolone Phase 3 results were positive, with planned U.S. submissions for MDD and PPD; tofersen’s pivotal Phase 3 primary endpoint was not met. Biogen suspended two retinal gene-therapy programs after studies missed primary endpoints and discontinued an Alzheimer’s anti-tau program after a Phase 2 failure.
- Key risks include product concentration and competition, pricing and reimbursement changes, clinical and regulatory uncertainty, patent disputes, reliance on collaborators and suppliers, COVID-19 effects, manufacturing capacity and supply risks, and foreign-exchange and equity-investment volatility. The filing also describes ADUHELM-related government investigations, securities litigation and other legal matters for which potential losses were not estimable in the filing.
Most important facts for investors to verify
- Whether TECFIDERA erosion and competition in MS and SMA continue at the rates management anticipated, and whether VUMERITY offsets any of that decline.
- The final CMS coverage decision for ADUHELM, uptake and reimbursement, future inventory write-downs, and progress and outcome of its confirmatory trial.
- Execution and proceeds timing for the proposed Samsung Bioepis sale, including deferred consideration and closing conditions.
- Whether pipeline milestones—particularly zuranolone and lecanemab—advance as expected, and the financial implications of failed or discontinued programs.
- The impact of equity-market movements on reported earnings, along with debt repayment or refinancing needs, collaboration obligations and significant legal or regulatory developments.