Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Biogen IDEC Inc (NASDAQ:BIIB)

The 30th Annual JPMorgan Chase Healthcare Conference

January 09, 2012 5:30 pm ET

Executives

George A. Scangos - Chief Executive Officer and Director

Analysts

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

All right. Welcome to the afternoon sessions for the 30th Annual JPMorgan Healthcare Conference. My name is Geoff Meacham, I'm the Senior Biotech Analyst here at J.P. Morgan. It's a pleasure to introduce Biogen Idec, one of the leaders in the multiple sclerosis space and speaking on behalf of Biogen is its CEO, George Scangos. George?

George A. Scangos

Thanks, Geoff, happy to be here today. Before I get started, I'll point you to our forward-looking statement. Many of the things I say today will concern events that may happen in the future and subject to any number of risks. And for a full explanation of those risks, you should refer to our regulatory documents filed with the SEC and that are available on our website.

So having said that, let me move into the presentation. I want to spend a little bit of time reviewing 2011, which was truly a remarkable year for us.

Every year can be like 2011, we're in great shape. And then spend most of the time talking about 2012, which as we sit here today at the beginning of the year, looks like a year of quite remarkable potential for the company. And I want to talk about some of the upcoming events and things that -- events that I think position us extremely well as we move into the future. Excuse me, something happened here. There we go.

All right, 2011. Listed on the left here are our goals for the year. As they were stated at the beginning of the year, there's no revisionist history here. This is what we said we were going to do. And so double-digit EPS growth as of the end of Q3. We had EPS growth of 18% year-over-year. We'll have our complete updated annual numbers at our call in a couple of weeks. We wanted to realize the economic benefits of the restructure we did last year. We did. We are now investing in the launch of some of our products that we hope will be approved in the relatively near term.

AVONEX market share worldwide has been stabilized. TYSABRI year-over-year revenues grew by 26%. TYSABRI risk stratification, incredibly important event for us if we're going to unlock the potential of TYSABRI. The JCV antibody test is now commercially available in the U.S. and in the EU. The label changed to reflect JC virus antibody status as a risk factor for PML is approved in the EU. And the PDUFA date in the U.S. is this month. So we hope to have that here very soon as well.

Advance to late stage pipeline, this was kind of a remarkable year. We had 2 positive Phase III trials for BG-12 in MS. We had actually positive data for our recombinant Factor VIII, long-lasting recombinant Factor VIII compound. The Phase IIb trial for daclizumab readout, that was also positive. The data there were quite convincing. And for ALS, the EMPOWER trial for testing dexpramipexole for ALS was fully enrolled and was a remarkably quickly enrolling trial.

All right. All of that, of course, is on top of a very strong financial track record over the past several years. You see here numbers from 2003 through 2010. Revenues have grown at an annual rate of 14% on non-GAAP diluted EPS at an annual rate of 23% and free cash flow at an annual rate of 26%. So this has been a remarkable achievement over a large number of years. I can't take credit for most of this, so I think it's a credit to the team that's a been in place at Biogen for a number of years.

All of that comes from the sales of our, I think, remarkable portfolio of drugs, 3 of the 4 here are for MS. So AVONEX has been on the market since '96. It continues to be a very strong product and some life cycle management studies that we're doing, I think, and tools that we're bringing to bear, I think, will continue to provide AVONEX with a very strong future. TYSABRI, amazingly efficacious drug, really transforming the lives of a significant number of patients with MS. FAMPYRA, which has now been introduced into several countries in the EU and is off to a good start and I'll come back to that in a few minutes. And of course, RITUXAN being marketed by Genentech and Roche, but in which we have a significant interest. And I keep doing something I shouldn't do. Sorry.

We sell those drugs in a large number of countries around the world. So the dark blue countries are countries where we market the compounds ourselves. The light blue countries are countries in which we have a distributor marketing for us. And so our goal over the next years is to turn more of the world blue. You see there are some gaps here that we would intend to close. And also, to take some of the light blue part of the world and turn it dark blue, take some of those distributorships and start to sell directly in those countries. So I think we can see an expanding global presence over the coming years. We will have more products hopefully to sell in that expanding global market.

This is probably the deepest MS pipeline anywhere. In addition to the 3 marketed products, BG-12 of course, you know about PEGylated interferon will read out in early '13, daclizumab, TYSABRI, have started a Phase III trial in secondary progressive MS. We're quite excited about the potential there. And anti-LINGO, which is actually a compound that promotes remyelination and could actually, if it achieves its goals, represent the next generation of treatment for MS, is in Phase I and we'll certainly move into Phase II over the course of this year. So this is a really remarkable MS pipeline.

Pipeline doesn't stop in MS. And this is just an indication of the data readouts that we have upcoming. Of course, in 2011, we had the 2 BG-12 trials and the daclizumab trial. This year, we will have pivotal trials readout for our long-acting Factor VIII and long-acting Factor IX and for dexpramipexole in ALS. So that's 3 more compounds this year on which pivotal trials will read out. In early 2013, we have PEGylated interferon trial reading out. 2014, you can see dex -- second trial for dex and daclizumab. And in 2015, TYSABRI in secondary progressive MS.

So each year over the next several, we have important pivotal trials reading out. Importantly, as we stand here today, 3 of those this year.

So these are the goals for 2012: Grow our leadership position in MS; get ready to launch our new high impact therapies; advance the late stage pipeline; and rebuild the early stage pipeline. And we'll talk about each one of those in a little bit of detail.

So let's first talk about growing our leadership position in MS. And what we mean by that, is we need to make sure that our current products are continued to be strong competitors on the marketplace.

So if we look first at AVONEX. We have an autoinjector for AVONEX now that is approved and marketed in several countries in the EU. This has been received incredibly and enthusiastically by patients. They love this device. It is easier for them. It is less intimidating. It is less painful. And so this has been extremely positive in those markets where it's been introduced. It's now -- while we have an intent to introduce it into an additional 15 countries over the course of this year, it's at the FDA, we hope to get approval for it in the U.S. over the course of this year as well. And we believe that's one of the tools that can continue to provide AVONEX with a very strong position and even an increasing position on the market.

As you know, all interferons have an issue with flu-like symptoms. We now have a starter kit, a titration kit. And whereby, if you titrate up the dose of the interferon over the course of one month, you can reduce both the frequency and the severity of the flu-like symptoms, that's also now been commercially available in Europe. And hopefully, will be approved here in the first half of this year.

And finally, PEGylated interferon, that's being dosed once a month subcu and twice a month subcu. That trial is fully enrolled. It reached full enrollment late last year. It's a one-year trial. And so we should have data from that trial in early 2013. So we think the combination of these activities, coupled with some others can continue to pride AVONEX with some real vibrancy.

TYSABRI, amazingly efficacious drug. The JC virus antibody test is commercially available, U.S. and EU. Over 59,000 patients have been tested for JC virus antibody status at the end of Q3. So substantially more, and again, we'll update that number on our call in a couple weeks. The updated label to reflect JC virus antibody status as a risk factor for PML has been approved in the EU. The PDUFA date for a similar label in the U.S. is this month. So we're very hopeful that very soon, we'll have an appropriate label in the U.S., to reflect JC virus antibody status. Once we have that label, we can have our sales reps out talking about this and I think that will be the beginning of a time where we can start to see the true value of TYSABRI unleashed. TYSABRI is amazingly efficacious, I think most neurologists view it that way. By having the risk stratification, we allow those neurologists to prescribe TYSABRI to more of their patients with appropriate risks of PML. They know which patients are at higher and lower risk and we can start to see more patients realize the benefits of the drug.

FAMPYRA was introduced onto the market in Germany as the first country in September. It is now launched in the U.K., Australia, Denmark, and Norway, and will continue to be launched in a number of other countries. And what you see here is the uptake curves for the first 15 weeks in Germany. The light blue line on the top is the number of starter kits. These are 2-week kits. If patients continue on the drug, they switchover to 4-week packs. And the number of patients switching over is in the lower line, so it's that dark blue line that represents more longer-term use of the product, that's the more interesting line. And that is a very good start. And so we are optimistic about the potential for FAMPYRA in the EU.

Now let's talk about a little bit about our pipeline coming up. BG-12, you've seen the data. What we did here on the left-hand column is just give you a synopsis. We had 2 trials, DECIDE and CONFIRM, they each had 2 doses. So there are 4 numbers for each of those and we've given you the range for all of those numbers alongside the range for Copaxone, which was used as the comparator in one of the arms. And just to make the point here, that the data for BG-12 really is quite remarkable. And we continue to be very excited about this potential for this compound.

A lot of activity going on right now. We are working as hard as we can to get this filed in both the U.S. and the EU and that's something that certainly will happen during the next few months, first half of the year. Manufacturing supply chain, product positioning, the promotional plan are all getting started. Later on in the year, we'll begin our scientific outreach, building patient support services. And finally, towards the end of the year, we will be starting to build the sales force, all in anticipation of what will hopefully be an approval of the drug early in 2013.

Long-lasting Factor VIII and Factor IX, both of those have enrolled quite well. They are both on track for readouts in the second half of this year. We will start pediatric trials in the first half of this year. And we've already begun to roll over some of the patients into extension trials. As you may know, the Factor IX product has about a threefold longer half-life or seem too from the earlier trials than the recombinant products that are now being used. And the Factor VIII product has a 1.7-fold longer half-life than the recombinant products currently being used. Hopefully, those numbers will hold up in the Phase III. Those are the numbers from the earlier trials. Those represent meaningful improvements in a number of -- in the treatment of patients. Even a onefold -- 1.7-fold increase in the half-life means that a patient using a Factor VIII prophylactically will have somewhere between 50 and 80 fewer injections per year. These are self-administered intravenous injections. That's a meaningful improvement to patients. So as we talk to patient and patient groups and do market research, both the Factor VIII and the Factor IX, I think are being awaited enthusiastically by a large number of patients, and we expect them, should the trials end successfully, to capture a significant market.

We are new to the hemophilia market. We have largely put in place, a commercial team composed of very experienced people, most of whom came from other companies with years of experience in the hemophilia marketplace. We have some more building to do. But the basics of that are in place. We are developing relationships with the KOLs in the U.S. and around the world. We are actually playing on our strengths in patient services, which we use to support our MS products, to use that as a competitive advantage for ourselves in the hemophilia market. And finally, we already have very good relationships and we're continuing to build them with the patient advocacy groups, the National Hemophilia Foundation, the World Hemophilia -- the World Federation of Hemophilia. So we believe we are in very good shape and we are preparing ourselves for potentially 2 new products, the first real innovations in the treatment of hemophilia in 15 years.

Now let's turn to dexpramipexole for a minute. This is our compound in Phase III for the treatment of ALS. And I just want to spend a couple minutes on this, because I don't think the potential for this compound has been truly appreciated. The Phase II data for this compound were published in November, in Nature Medicine. And it was a very unique and interesting trial with an interesting endpoint. And I just want to talk to everybody for a while, because I think most people consider this a long shot. This is a disease for which so many therapies have failed over the past 15 years or so. It is a difficult disease.

In the Phase II study, which was done by Knopp Biosciences, a small company from whom we licensed the drug, they tested a high dose of the drug, 300 milligrams versus a low dose, 50 milligrams. They measured mortality, they measured the rate of progression and they measured a novel Joint Rank Score, which took into consideration, both mortality and progression. And in that, they ranked all the patients, basically from the worst outcome to best outcome. So the first patient who dies during the trial is the worst outcome. And the second patient who dies is the second worst and so on. And once you get through all the deaths, then the patient who progressed the most has the next worst outcome, down finally to the patient who progressed the least. So every patient is ranked worst outcome to best outcome. And then they look to see if there was a statistically significant difference in the distribution of patients in the 2 groups. And in that combined endpoint, there was. The Phase II trial had 92 patients and the high dose group provided a significantly better outcome for those patients than the low-dose group, as measured by this Joint Rank Score. So that was very encouraging data and there are a number of other data from the Phase II trial that were equally encouraged.

Now we are currently doing a Phase III trial. The Phase III trial began enrollment in March of last year and it finished enrollment in Q3 of last year. This was the fastest enrolling trial in our history, which reflects the -- I think, the desperation and the need in this patient population for something that can help them. So there are 943 patients enrolled, so tenfold more patients than in the Phase II trial. It is a one-year trial. Every patient will have at least 12 months of data. The primary outcome measurement is this Joint Rank Score, the same outcome that was statistically significant in the Phase II trial, it is a novel endpoint but it's clinically validated, it's accepted by the regulatory authorities, we have an SPA with the FDA, this is also viewed favorably by the European regulatory authorities. So the Phase III trial has enrollment criteria that are essentially the same as were used in the Phase II trial. We've changed as little as we can. Same -- very similar patient populations measured over a year versus 6 months, but with the primary outcome that already was statistically significant in the Phase II trial.

So stuff happens and every trial has its risk, but this is far from a long shot. This is based on a solid body of Phase II data. And we are, I think, genuinely hopeful that we will be able to provide meaningful therapy for the thousands, tens of thousands of ALS patients who right now, have very little to help them. We'll have data from this trial reading out in the second half of this year.

Daclizumab is an antibody that we are moving forward together with Abbott. It blocks -- it's thought to block the IL-2 CD25 interaction, for you immunologists in the audience. We reported the results of the 600-patient Phase IIb study earlier this year, and you can see the numbers here from both the high-dose and the low-dose group. These are quite -- I'll say, these are numbers that suggest a quite a good level of efficacy of daclizumab. And particularly, the EDSS data, which in one study, were reduced -- EDSS was reduced by 43%, which did not quite reach statistical significance. And then the other study, by 57% -- not the other study, but the other dose, by 57% which did. Those are quite remarkable numbers. So this looks like it could have, if these data are replicated in the Phase III trial, a substantial potential to provide a real benefit to patients with MS. In fairness, there were a couple of safety signals. And I think we have tried to be transparent about these, they're on the slide here, a couple of serious infections, a few patients had liver enzymes. So we're following this compound closely. We are finishing this Phase III trial with 1,800 patients. This looks like it has the potential to be a meaningful player in our inventory of drugs to fight MS. And this will readout in 2014.

So just to bring this all together. In the first half of this year, we'll file BG-12. Second half, we have readouts for Factor VIII, Factor IX, dexpramipexole. PEGylated interferon will readout early in '13. I mean, a little over a year from now.

GA101 is an interesting compound. It's a follow on to RITUXAN, a potential follow-on to RITUXAN, it's being moved forward by Genentech and Roche, but in which we have a substantial financial interest. Have the first the data from that, in CLL in 2013. Daclizumab in 2014. Ocrelizumab is another compound being moved forward by Genentech and Roche, in which we have a substantial financial interest, data readout in MS in 2014 and '15. And finally, TYSABRI. So this is our late-stage pipeline. This is an amazingly rich late-stage pipeline, I think for any company, let alone a company of our size.

And finally, I'm going to spend just a couple minutes talking about our early-stage pipeline. As you know, we went through a period where we focused the company, we stopped a lot of R&D projects and we tried to really leave ourselves only with projects where we could really be sure or, say, be confident that the money was being well-spent, that the compounds were competitive, that the data was solid, that we had a chance of bringing these to the market and providing some value to both patients and investors. That left us with a very thin pipeline of early-stage compounds. And so we have been working diligently, I think, we've been fairly public about wanting to rebuild that early-stage pipeline. And we've done so or we've begun to do so. And I just want to talk about that for a couple of minutes. We in-license from Portola, a very high-quality biotech company in South San Francisco here, not far from here, a potential oral therapy for a variety of autoimmune diseases, including rheumatoid arthritis and lupus. This is an inhibitor of a target called Syk. This is one of certainly, the most interesting targets for the treatment of autoimmune disease around today. It's a very high-quality compound. It does inhibit activation of B cells in humans, that probably largely explains its efficacy. And that compound will be moving into Phase II over the course of this year.

Last week, we announced the collaboration with Isis for an anti-sense molecule for the treatment of, what's called SMA, spinal muscular atrophy. This is the most common genetic cause of death in newborns. It occurs anywhere from 1 in 6,000 to 1 in 10,000 live births. It is due to a mutation in a gene called SMN1. There is a very similar, almost identical gene called SMN2, which normally doesn't make very much SMN protein. So if the SMN protein isn't made from the first SMN1 gene, people are deficient and hence, the disease. So this compound from Isis certainly is designed to, and in all the animal models, actually does reactivate expression of the SMN2 gene, so that it makes meaningful levels of the SMN protein and overcomes the defect in the first gene. So it's this activation of one gene, it's synthesis of a protein from that gene to overcome the defect of another gene. Works remarkably well in the animal models. Mice that have a model of this disease have a lifespan of about 10 days. Treat them with this compound, their lifespan becomes normal. So this is not a minor effect in the animals. This has a Phase I study, has started already, and we're very excited about the potential of this program as well.

Samsung, biosimilar ventures, just to touch on this quickly. We signed a deal at the beginning of December. I've gotten a lot of questions about it. This brings together, Samsung's expertise and their strategic goal of working in biologicals and they have a corporate strategy that says they want to enter into the biologicals business and they're going to do it through biosimilars. They have excellent capabilities. They have excellent people working on this. They are building a facility in Korea. They are serious players here. And they have deep pockets. They are a great partner for us. We have all the expertise we need in cell line engineering, process development, manufacturing analytics. So between us, Samsung and we have what it takes to be a successful venture in biosimilars. We have a joint venture. Samsung has put in $255 million, we've put in $45 million. So we own 15% of the joint venture, Samsung owns 85% of the joint venture. If the joint venture needs additional funding, that will be provided by Samsung. As we go forward, any time over the next several years, we can buy our way up to a 50% ownership of this joint venture. So we believe this is an excellent deal for us. It's an excellent deal for Samsung. And together with Samsung and Biogen Idec working together, we believe we have a really good shot at being a very dominant player in the biosimilars arena.

So just a quick summary in the last few seconds here. 2012 is going to be an amazing year. We have a lot to do in support of our current projects. AVONEX, I already talked about. TYSABRI, we get full speed behind the risk stratification based on the existing label in the EU, the anticipated label in the U.S. We have late-stage pipeline events reading out, 3 of them over the course of this year. And so we believe 2012 is a year of pretty amazing potential for us that poise -- that puts us in a very good position, not only for 2012, but for substantial growth in this year and in the years beyond.

So I will stop there. And thank you all for your attention. Thanks.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Biogen Idec's CEOPresents at The 30th Annual JPMorgan Chase Healthcare Conference (Transcript)
This Transcript
All Transcripts