In wake of Bio­gen's skir­mish with the SEC, phar­ma gi­ants are chang­ing the way they do quar­ter­ly re­ports

Af­ter re­ceiv­ing com­plaints from the SEC last spring, Bio­gen changed the way it re­ports up­front pay­ments to col­lab­o­ra­tors in its quar­ter­ly up­dates. But it ap­pears Bio­gen wasn’t the on­ly one who got the mes­sage.

Sev­er­al phar­ma gi­ants — in­clud­ing Eli Lil­ly, Mer­ck, Bris­tol My­ers Squibb, Ab­b­Vie and Pfiz­er — are mak­ing sim­i­lar changes in this year’s Q1 re­sults, ac­cord­ing to Mar­ket Watch, which first re­port­ed the news. The changes re­volve around cer­tain fig­ures that don’t com­ply with Gen­er­al­ly Ac­cept­ed Ac­count­ing Prin­ci­ples, al­so known as non-GAAP mea­sures.

Last March, the SEC ex­pressed con­cern over Bio­gen’s ex­clu­sion of up­front pay­ments and pre­mi­ums paid for eq­ui­ty stakes from its non-GAAP R&D ex­pense and net in­come re­ports. In its re­sponse, Bio­gen said it ex­clud­ed those fig­ures to “bet­ter re­flect our core op­er­at­ing per­for­mance.”

“We be­lieve that ma­te­r­i­al up­front pay­ments and pre­mi­ums paid for the ac­qui­si­tion of re­lat­ed com­mon stock as­so­ci­at­ed with sig­nif­i­cant col­lab­o­ra­tive and li­cens­ing arrange­ments dif­fer from the nor­mal, re­cur­ring, cash ex­pens­es nec­es­sary to op­er­ate our busi­ness,” Bio­gen wrote in a let­ter back to the SEC.

The com­pa­ny added that non-GAAP met­rics are mere­ly sup­ple­ments to GAAP state­ments, and that it does not be­lieve its pre­sen­ta­tion of non-GAAP in­for­ma­tion was mis­lead­ing.

A month lat­er, the SEC re­spond­ed that Bio­gen’s ex­clu­sion of cer­tain pay­ments was “in­con­sis­tent” with SEC guid­ance, and be­gin­ning in the sec­ond quar­ter of 2021, the com­pa­ny be­gan in­clud­ing those fig­ures. Just this past quar­ter, Bio­gen al­so be­gan in­clud­ing ma­te­r­i­al pay­ments made on the ac­qui­si­tion of in-process R&D as­sets in its de­ter­mi­na­tion of non-GAAP net in­come.

Pri­or pe­ri­od non-GAAP re­sults have been up­dat­ed to re­flect these changes, ac­cord­ing to Bio­gen.

“This has been a top­ic long dis­cussed in the in­dus­try. At the end of the day, it’s a more con­ser­v­a­tive ac­count­ing method­ol­o­gy and the right call by the SEC for in­vestors, as up­front pay­ments and col­lab­o­ra­tions have be­come a norm in the in­dus­try,” Sal­im Syed, a Mizuho an­a­lyst, told End­points News in an email.

“While it in­tro­duces per­haps some ad­di­tion­al lumpi­ness in the quar­ter­ly non-GAAP EPS num­bers, it puts all com­pa­nies on a lev­el play­ing field, and it al­so lev­els how each com­pa­ny treats ex­ter­nal vs in­ter­nal R&D spend,” he con­tin­ued.

Oth­er com­pa­nies aren’t wait­ing around for a com­plaint to make the nec­es­sary changes.

Mer­ck al­so an­nounced this year that it will no longer ex­clude ex­pens­es for up­front and mile­stone pay­ments from its non-GAAP re­sults, in or­der to “align with views ex­pressed by the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion.” That re­sult­ed in a full $0.65 shaved off its 2021 full-year earn­ings per share fig­ure, ac­cord­ing to the com­pa­ny.

Eli Lil­ly wasn’t af­fect­ed quite as much, an­nounc­ing just ahead of its Q1 re­sults this year that it ex­pect­ed a $0.15 im­pact on its earn­ings per share as a re­sult of sim­i­lar changes.

Bris­tol My­ers, mean­while, saw a $0.10 re­duc­tion in earn­ings per share in Q1 up­on mak­ing the changes. Ab­b­Vie saw an $0.08 im­pact on earn­ings per share last quar­ter, while Pfiz­er saw a mere $0.05 change.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 144,300+ biopharma pros reading Endpoints daily — and it's free.

David Loew (Ipsen)

Ipsen snags an ap­proved can­cer drug in $247M M&A deal as an­oth­er bat­tered biotech sells cheap

You can add Paris-based Ipsen to the list of discount buyers patrolling the penny stock pack for a cheap M&A deal.

The French biotech, which has had plenty of its own problems to grapple with, has swooped in to buy Epizyme $EPZM for $247 million in cash and a CVR with milestones attached to it. Epizyme shareholders, who had to suffer through a painfully soft launch of their EZH2a inhibitor cancer drug Tazverik, will get $1.45 per share along with a $1 CVR tied to achieving $250 million in sales from the drug over four consecutive quarters as well as an OK for second-line follicular lymphoma by 1 Jan. 2028.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 144,300+ biopharma pros reading Endpoints daily — and it's free.

AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 144,300+ biopharma pros reading Endpoints daily — and it's free.

De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.

Joe Wiley, Amryt Pharma CEO

Am­ryt Phar­ma sub­mits a for­mal dis­pute res­o­lu­tion to the FDA over re­ject­ed skin dis­ease drug

The story of Amryt Pharma’s candidate for the genetic skin condition epidermolysis bullosa, or EB, will soon enter another chapter.

After the Irish drugmaker’s candidate, dubbed Oleogel-S10 and marketed as Filsuvez, was handed a CRL earlier this year, the company announced in a press release that it plans to submit a formal dispute resolution request for the company’s NDA for Oleogel-S10.

Sen. Thom Tillis (R-NC) (J. Scott Applewhite/AP Images)

Phar­ma-friend­ly sen­a­tor calls on FDA for a third time to show patent pro­tec­tions should­n't be blamed for high drug prices

North Carolina Republican Sen. Thom Tillis made a name for himself in the 2020 election cycle as the darling of the pharma industry, accepting hundreds of thousands in campaign contributions, even from the likes of Pfizer CEO Albert Bourla.

Those contributions have led Tillis to attempt to re-write patent laws in pharma’s favor, a move which failed to gain steam in 2019, and request for a third time since January that the FDA should help stop “the false narrative that patent protections are to blame for high drug prices.”

EMA signs off on 3 drugs re­cent­ly re­ject­ed by FDA, in­clud­ing Bio­Mar­in's new he­mo­phil­ia gene ther­a­py

The EMA’s human medicines committee on Friday recommended three new drugs for approval or conditional approval, even as their US counterparts have rejected these three for various reasons.

In a major move, CHMP offered a thumbs-up to a conditional marketing authorization for the first gene therapy to treat severe hemophilia A, although the agency cautioned that it’s so far unknown how long the effects of infusion will last.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 144,300+ biopharma pros reading Endpoints daily — and it's free.

Joe Papa (Ryan Remiorz/The Canadian Press via AP, File)

Joe Pa­pa re­signs as chair of Bausch Health as bil­lion­aire John Paul­son takes over

Joe Papa, chair of Bausch Health, officially resigned on Thursday and the board appointed billionaire hedge fund manager John Paulson as the new chair, effective immediately.

The specialty pharma company sought to make clear that Papa’s abrupt departure “was not due to any dispute or disagreement with the Company, its management or the Board on any matter relating to the Company’s operations, policies or practices.”

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 144,300+ biopharma pros reading Endpoints daily — and it's free.