Biogen Points Out Three New Risk Factors For 2016 in SEC Filing, Report Shows

Biogen Points Out Three New Risk Factors For 2016 in SEC Filing, Report Shows
February 8, 2016
By Alex Keown, Breaking News Staff

BOSTON –Biogen announced an 11 percent growth in revenue over 2014 to $10.8 billion, but three points tucked into a later filing with the U.S. Securities and Exchange Commission might be more concerning for investors, the Boston Business Journal reported Friday.

Under the heading of “Risk Factors,” Biogen notes three issues that could pose problems for the company’s bottom line over the next year and beyond. The Journal noted the issues include drug pricing issues, debt and uncertainties around a deal the company has with Samsung Bioepis.


In its Risk Factors section, Biogen pointed out concerns over “the growing volume of complaints from insurance companies as well as the federal government (under the Affordable Care Act) about the high prices of drugs, and the growing power of those organizations to demand discounts as they get larger through mergers,” the Journal reported. Those factors may result in the lowering of drug reimbursements. As the 2016 presidential campaign continues, as well as fallout from recent congressional hearings on the high price of prescription medication, the costs of medication is likely to continue to take center stage in the public conversation.


Biogen “sold $6 billion worth of senior notes in 2015, expanding its total debt load from $647 million to $6.65 billion over the course of the year,” the Journal said. That amount of debt could make it difficult for the company to borrow additional funding and will likely hamper company cash flow.

Risky Deal

Biogen noted there are certain risks with its deal with Samsung Bioepis, a division Samsung Biologics, which was established in 2012. The two companies are working together to develop biosimilar medications. While this relationship was not included in the company’s 2014 Risk Factor analysis, the Boston Business Journal speculated it could have been included due to Samsung Bioepis announcing last year that it was seeking $1.3 billion in funding for product development.

While those are three factors that may be cause of concerns for some investors, last month during the J.P. Morgan Healthcare Conference, analysts questioned Biogen’s shift toward Alzheimer’s research. The company has been successful in developing multiple sclerosis treatments, but those dealing with Alzheimer’s disease are considered high risk.

“We get comments a lot that our pipeline is risky,” George Scangos, Biogen’s chief executive officer, said in a presentation at the conference last month. “That we’re addressing areas where the industry has had a hard time being successful. We are addressing those areas. If we weren’t addressing those areas then I’d be up trying to answer the question of why we think we could maintain good pricing in … me-too indications.”

In 2015, Biogen’s stock soared after Biogen revealed positive results with its experimental Alzheimer’s disease treatment. In April, Biogen announced its drug BIIB037, or aducanumab, led to reductions in brain amyloid plaque by as much as 71 percent. The plaque reduction was more pronounced as the dose of the drug increased and over time and Biogen also announced the drug was able to reduce cognitive decline. Biogen is looking to begin a Phase III trial, which if it proves successful, would then lead the company to seek approval to market the drug. Developing a treatment that target’s Alzheimer’s disease at the source, something that hasn’t yet successfully been managed, will be an expensive affair for any biotech company. Biogen’s executives speculated bringing the drug to market could cost approximately $2.5 billion, which would include costs of conducting clinical trials as well as construction of a manufacturing facility for the investigational drug.

Biogen’s stock is down this morning more than 3 percent, trading at $254.19 per share as of this writing. The stock has dropped since January, when it saw a high of $280.57 per share.

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