Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Second Quarter 2019 Financial Results and Business Update. Ask questions. Please limit yourself to one question Thank you.
I would now like to turn the conference over to Biogen's CEO, Michelle Dunatsos. You may begin your conference.
Thank you. Good morning, everyone, and thank you for joining us. I would like to start by thanking Matt Calistri for nearly 4 years he spent leading our Investor Relations program. We wish him the very best in his next endeavor. I would like to welcome Joe Mara, our new Vice Presidents and Head of Investor Relations, who's a talented and energized finance and business leader with over 12 years of experience at Biogen across a number of functions, I am confident that Joe will prove to be a valuable resource for the investment community, and I look forward to all of you getting to know Joe Joel DeFroy Jules.
Thank you, Ms.
Thank you, Michelle, and welcome everyone to Biogen's second quarter 2019 earnings conference call. I look forward to getting to know all of you over the coming months. Before we begin, I encourage everyone to go to the Investors section of biogen.com find the earnings release and related financial tables, including a reconciliation of the GAAP to non GAAP financial measures that we will discuss today. Our GAAP financials are provided in Tables 12 and Table 3 includes a reconciliation of our GAAP to non GAAP financial results. We believe non GAAP financial results better represent the ongoing economics of our business and reflect how we manage the business internally.
We have also posted slides on our website that follow the discussions related to this call. I would like to point out that we will be making forward looking statements which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to consult the risk factors discussed in our SEC filings for additional detail. On today's call, I am joined by our Chief Executive Officer, Dichel Gunazzos, Doctor.
Michael Ehlers, EVP of Research And Development, and our CFO, Jeff Capello. We will also be joined for the Q And A portion of the call by our Chief Medical Officer, Doctor. Al Sandrok. Now, I will turn the call back over to Michel.
Thank you, Joe. Now let
me begin with some financial highlights. Compared to the same period a year ago, Biogen delivered solid top line and bottom line growth. 2nd quarter revenues grew 8 percent to $3,600,000,000. 2nd quarter GAAP earnings per share grew 88% to $7.85 and non GAAP EPS grew 58 percent to $9.15. Based on our strong performance year to date and our updated outlook for the second half of the year, we are raising our full year financial guidance, which Jeff will discuss in more details.
Now let me review the highlights from the second quarter. First, revenues from our MS core business, including OCREVUS royalties, increased 3% versus the prior year to 2.4 dollars. Excluding OCREVUS, the total number of patients on our MS products globally grew in the low single digits versus the prior year. Critically, we are focused on addressing the IP challenge with TECFIDERA, while also preparing for the expected launch of VUMERITY towards the end of the year. 2nd SPINRAZA global revenues grew 15 percent to $488,000,000, driven by year over year revenue growth both in the U S and outside the U S.
The number of commercial patients on SPINRAZA increased by approximately 12% from last quarter, And we now have approximately 8400 patients on SPINRAZA, including the expanded access program and clinical trial. Within the U. S, the number of SPINRAZA patients increased by approximately 4% versus Q1. Which we believe demonstrates the potential for continued patient growth We were very proud to announce new data for the nuclear study of SPINRAZA. We have continued to generate long term data across broad patient populations, which underscore the compelling safety and efficacy profile of SPINRAZA.
Many are focused SPINRAZA. While we welcome new options for patients, we believe it is premature to make assumptions about the ultimate uptake of emerging modalities, given the large number of outstanding questions on their clinical profiles. Importantly, SPINRAZA remains the only SMSRP approved for all age groups. 3rd, our biosimilars revenue grew 45% year over year, to $184,000,000. We continue to deliver on our broad portfolio of anti TNFs including the strong launch of Imhaldi, the market leading biosimilar, referencing EMEA in Europe.
We estimate that the uptake of our biosimilars products will contribute up to 1000000000 in Healthcare Savings across Europe in 2019, an important contribution to the long term sustainability of the European Healthcare Systems that Biogen is proud to contribute to. We believe this business continues to demonstrate a strong trajectory with the potential to continue to drive growth. 4th we made continuous progress to develop and expand our pipeline as we work to build a multi franchise portfolio. We added 4 clinical programs for our pipeline this quarter, including the 2 mid to late stage of thalmorogy gene therapy programs we acquired through Nightstar, also an oral BTK for MS and an oral compound for sporadic ALS. In total, we have standard and diversified our pipeline, which now includes 27 clinical programs.
Mike will provide more details on optimize potential shareholder returns. During the second quarter, we generated $2,000,000,000 in cash flow from operations, and seemingly 10,400,000 shares at an average price of $2.31 per share for a total of $2,400,000,000. As we have stated previously, we view share repurchase as an important element of thoughtful and value creating capital allocation. But at the same business development and M and A opportunities as evidenced by the 11 deals we executed over the past two and a half years including our recent acquisition of Nightstar. As we have demonstrated, we are committed to maximizing returns from shareholders, while continuing to bring innovative therapies to patients, something that demands a thoughtful approach toward all our investments over both the short and the long term.
In summary, Biogen continued to execute on our strategic objectives. We delivered solid financial results, raised our full year 2019 financial guidance, continued to progress our pipeline and were opportunistic and disciplined with the capital allocation. Our core MS business demonstrated resilience and delivered an all time high quarterly revenues. SPINRAZA continued to grow in key markets, including mature markets, such as the U. S.
And we presented compelling new data for the NUTURE study. We grew our biosimilars business, driven by strong launch of IMRALDI We added 4 new clinical programs to our pipeline, and we generated significant cash as we focused on strategic strategically allocating, capital towards the arrears we believe have the highest potential return. Before I conclude, I would like to discuss how Biogen is evolving its strategy to drive long term growth. Together with our Board of Directors, we have reflected on the opportunities before us, and we continue to believe that the core focus on neuroscience will lead to long term shareholder value creation based on the large and growing epidemiology, breaking science, and our deep neuroscience expertise and core capabilities. With that said, we are refining the 5 strategic priorities we outlined 2 years ago.
Our overarching goals are to enhance our focus on our current commercial business, accelerate the areas with the most attractive opportunities to build new franchises, rebalance the risk reward profile vehicle rails. Our first priority remains unchanged to maintain long term leadership in MS and maximize size in neuromuscular disorders. We aim to build on SPINRAZA as the most successful rare disease launch ever. As we pursue multiple potential therapies for ALS as well as a muscle strengthening program with potential applicability across a broad range of neuromuscular diseases. We have reported very encouraging results for Tofersen in SOD1 ALS.
And we believe this has positive implication for our broader portfolio targeting all the forms of the disease. Our third priority is to continue developing and expanding our neuroscience portfolio, while now also widening our lens to selectively follow the science into therapeutic adjacencies, including immunology. Mike will provide more details on our strategy in R&D. Our 4th priority is to unlock the potential of biosimilars as a continued growth driver as we work to create financial headroom for innovation in the health care system. We aim to both increase the size of our biosimilars portfolio and expand geographically And 5th, in parallel, we will continue to drive efficiencies, including adopting digitalization in our operating model, through continuous improvement, and we will be diligent in capital allocation as we aim to maximize returns for our shareholders.
We believe these priorities reflect both the recent progress we've made and the most attractive opportunities ahead of us. We are working diligently to rebalance the risk profile of our pipeline, leading us to privatize the areas we believe have the greatest probability of success and highest potential return. Overall, Biogen's purpose remains the same we aim to transform patients' life by pioneering and leading neuroscience and therapeutic adjacencies. I will now turn the call over to Mike for a more detailed update on our recent progress and long term strategy in R&D.
Thank you, Michelle, and good morning, everyone. We are very pleased with the progress in our industry leading neuroscience pipeline with our expanding efforts in immunology. Illustrating the momentum in our portfolio, we look forward to 10 mid to late stage readouts over the next 18 months. As Michel mentioned, our top priorities are to continue strengthening our franchises in MS and neuromuscular disorders, Beyond these priorities, we are refining opportunities we see following our acquisition of Nightstar Therapeutics, we now view ophthalmology as a core growth area. Moreover, recognizing the potential of our existing assets and longstanding expertise in immunology, we now consider this to be an emerging growth area.
Diving in, let me begin with advances we made in the second quarter to secure long term scientific leadership in our MS and neuromuscular franchises. At the annual meetings of the American Academy of Neurology and the Consortium of Multiple Sclerosis Centers, we presented new interim data from Evolve MS1, an ongoing single arm open label 2 year phase 3 study evaluating the safety and efficacy of diroximel fumarate to be marketed as remeritif approved by the FDA in patients with relapsing remitting MS. Interim result and 696 MS patients showed that treatment with droximel fumarate was associated with a 79% reduction in the annualized relapse rate over 1 year when compared to VACE line with an 83% reduction in newly diagnosed patients. The mean number of gadolinium enhancing lesions in patients treated with reduced by 77% compared to baseline in the total population and by 96% in newly diagnosed patients. Over one year, the rate of gastrointestinal adverse events leading to discontinuation was 0.7%.
GI tolerability of diroximate fumarate versus TECFIDERA is being evaluated in the ongoing EVOLVE MS2 study. This study is now near completion and we expect results in the coming weeks I'm also selective small molecule inhibitor of rutonse tyrosine kinase or BTK. BTK is a nonreceptor tyrosine kinase that regulates the development and signaling B cells and myeloid cells that are hypothesized to contribute to the pathogenesis of MS. Notably, VB-ninety one is a non covalent inhibitor of BTK, which we believe together with its high potency and selectivity as a potentially best in class profile. Evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of BIIB091 in healthy adults.
Turning to our progress in neuromuscular disorders, At the Cure SMA annual conference in the 5th Congress of the European Academy of Neurology, we presented new interim data from the NURTURE study of SPINRAZA in pre symptomatic infants with SMA. Now including up to 45 months of analysis, this ongoing open label study once again highlighted the remarkable efficacy profile of SPINRAZA. Specifically, of the 25 presymptomatic patients with SMA treated with SPINRAZA in this study, 100% were alive. None required tracheostomy or permanent ventilation 100% were sitting independently and 92% were walking independently or with assistance. In addition, patients were approaching the maximum score 3.4 out of 64, and patients with 2 SMN2 copies achieved a mean score of 62.1 out of 64.
Importantly, these data also showed that the overwhelming majority of patients had achieved these motor milestones within the timeframe of normal development. Given the robust durable efficacy file with a reversible, targeted mechanism of action and unsurpassed real world experience. We believe SPINRAZA will remain a foundation of care and SMA course of diseases of the nervous system. We are excited by the depth of our ASO pipeline targeting the genetic underpinnings of a range of neurological diseases such as ALS. Specifically, as we described during our recent ALS webcast, we are targeting genetic forms of ALS where modulation causally linked to disease.
For instance, we continue to advance the Phase III VALOR study of Tofersen, an antisense oligonucleotide designed to degrade SOD1 MRNA and SOD1 ALS. We believe that this study has the potential to support registration for this devastating genetic form of ALS. We have now finalized the phase 3 study design, which includes 99 patients treated with 100 milligram to a fersen or placebo. Over the course of this 20 weeks, 28 week study, patients will receive 3 loading doses over the 1st 29 days followed by maintenance doses every 4 weeks. Based on the final phase 3 study design, we expect a readout from this study in 2021.
We also continued to advance the Phase I study of BIIB078, an antisense oligonucleotide targeting hexanucleotide repeat expansions in C9ORF72, the most common genetic cause of ALS. Data from this study are also expected in 2021. Further We are pursuing the first patient was dosed in the phase 1 study of BIIB100 for sporadic ALS last month. BIIB100 is a small molecule inhibitor of EXportin-one or XP01, a nuclear transport factor that mediates the export of many proteins from the cell nucleus to the cytoplasm. With BIV100, We aim to test the hypothesis that reducing nuclear protein export may prevent the formation of neuronal cytoplasmic inclusions and thereby slow the clinical progression of sporadic ALS.
In Movement disorders, the phase 2 study of our anti tau antibody BIIB92 or Gosuranumab and progressive supranuclear palsy is fully enrolled with data expected in the second half of this year. We believe the positive data from this study could potentially support a filing. Also this quarter, we completed enrollment of the phase 2 study of BIIB-fifty four, a monoclonal antibody targeting extracellular alpha synuclein for Parkinson's disease. Parkinson's disease is the 2nd most common neurodegenerative disorder with a prevalence of approximately 3,000,000 patients across the G7 and no available treatment to slow its inexorable progression. Aggregation of misfolded alpha synuclein and degeneration of nigrostriatal dopaminergic neurons represent hallmark pathologies of Parkinson's disease and genetic data from familial Parkinson's disease show that alpha synuclein can play a causal role in Parkinson's disease Genesis.
In the second half of next year, we expect to receive data from the 1 year placebo controlled period of this study This will include safety data, as well as a neuroimaging based assessment of stridled dopaminergic transporter density. Beyond BIV54, We expect to advance up to 2 new antisense oligonucleotide programs for Parkinson's disease into the clinic by the end of the year. And in Alzheimer's disease and dementia, this quarter, our collaboration partner Eisai dosed the 1st patient in the phase 3 study of BAN2401 for early Alzheimer's disease and continued to advance the phase 3 study Ellenbecestat, also for early Alzheimer's disease. In parallel, we continue to advance our portfolio of tau directed therapeutics, including Gosuranumab in phase 2, BIB-seventy six, a distinct anti tau antibody in phase 1, and BIV-eighty, an antisense oligonucleotide targeting tau mRNA currently in phase 1, being developed in collaboration with IONIS Pharmaceuticals. Further, we are advancing a suite of next generation preclinical programs pursuing genetically validated targets for find subsets of Alzheimer's disease and dementia patients.
Moving to Neurocognition, we continue to advance the Phase 2b study of BIIB-one hundred and four for the treatment of interimin associated with schizophrenia. Last month, the FDA granted fast track designation to BIV-one hundred and four for this indication, BIB-one hundred and four is a 1st in class ampa receptor potentiator that we believe has compelling data from a number of distinct early clinical studies, Data from this Phase 2b study are expected in late 2020. As I mentioned earlier, we view immunology as an emerging growth area Biogen that takes advantage of study of BIIB059, a humanized monoclonal antibody that binds BDC A2 for cutaneous lupus erythematosus, or CLE, and systemic lupus arthomatosis, or SLE. As shown in the phase 1 study of BIIB059, recently published in the Journal of Clinical Investigation, treatment with BIIB059 led to BDCA2 internalization on plasmacytoid dendritic cells, as well as decreased interferon pathway activation, reduced immune infiltrates in skin lesions, and decreased cutaneous disease activity in patients with SLE and CLE. With limited to this area of high unmet need.
Data from this study are expected by the end of this year. Further, in collaboration with UCB, we plan to initiate a Phase III program with the in the first half of next year for dapirolizumab Pegol, an anti CD40 ligandpegulated fab, in patients with active SLE despite standard of care treatment. This decision is based on the promising results of the Phase 2b clinical trial. Interim data from this study were presented at the European Congress of Rheumatology last month. As part of the ongoing process of risk and opportunity within our pipeline, we continue to strategically prioritize our programs and disease areas.
To that end, we have decided not to initiate the Phase III trials vixotra gene or BIIB74 in trigenal neuralgia this year, although we will continue with phase 3 preparation activities in advance of a potential initiation next year. We will continue to evaluate our trigeminal neuralgia program, and we will assess potential initiation of Phase III studies next year. We continue to advance a Phase study of VIXOTRA gene in small fiber neuropathy and now expect a readout from that study in 2021. In addition, we continue to enroll the Phase III study BIB093 for the prevention and treatment of severe cerebral edema in patients with large hemispheric infarction with the potential launch as early as 2022. We also expect a Phase 2 readout of TMS-seven in acute ischemic stroke by the end of next year.
Finally, emphasizing our focus on genetically validated targets in defined patient populations to rebalance pipeline risk. Let me conclude by highlighting our recent acquisition of Nightstar Therapeutics. We are extremely excited to join forces with this talented team of drug developers to address serious genetic causes of blindness, for which there are no potential to deliver 1st in class gene therapies to patients suffering from severe retinal diseases. Our lead drug candidate NSR rep 1 now known as DIV-one hundred and eleven is an AAV based gene therapy delivered by targeted subretinal injection for the treatment of choroideremia, a rare degenerative disease that inevitably leads to was associated with a suggesting that BIVB-one hundred and eleven has the potential to significantly alter the course of this disease. We expect data from the phase 3 star trial of BIV-one hundred and eleven in the second half of next year.
Our 2nd clinical stage asset NSR RPG, now known as BIV-one hundred and twelve, is an AAV based gene therapy targeting X linked retinitis pigmentosa or XLRP. Like BIV-one hundred and eleven, BIV-one hundred and twelve is delivered by targeted subretinal injection, Data from the phase 1two dose escalation study showed promising signals of early efficacy, including increases in central retinal sensitivity as measured by micro A Phase twothree dose expansion study of BIV-one hundred and twelve is currently enrolling with data expected in the second half of next year. These diseases, which inevitably lead to blindness and the associated severe disability, are part of a larger set of inherited retinal diseases, which have been estimated to afflict up to 200,000 patients in the U. S. Alone that may be amenable to similar genetic medicine solutions.
We look forward to leveraging As Michelle mentioned, including our new Nightstar assets, we added 4 clinical programs to our pipeline this quarter, BIB-one hundred and eleven for choroide areemia fib-one hundred and twelve for excellent retinitis pigmentosa fib-ninety one, a small molecule BTK inhibitor for MS, and VIVV-one hundred, a small molecule XPO-one inhibitor for sporadic ALS. In total, we have added 17 clinical programs over the past two and a half years as we have continued to expand our pipeline. And we expect to advance up to 3 additional programs into the clinic in the second half of this year including up to 2 new antisense oligonucleotide programs for Parkinson's disease. As we widen our strategic lens, We will continue to mitigate risk by seeking later stage assets, prioritizing targets that have been validated by human genetics deploying biomarkers in early stage clinical programs and leveraging our asymmetric capabilities and expertise including 8 phase 2 readouts, the phase 3 readout of BIIB-one hundred and eleven, and head to head data for VUMERITY, we believe we are poised to reinforce our core franchises in MS and neuromuscular disorders build further depth in our neuroscience portfolio and follow the science into emerging areas.
Above all, we remain focused on our goal of developing transformative medicines for patients living with devastating neurological diseases. I will now pass the call to Jeff.
Thanks, Mike. Good morning, everyone. I'll now review our financial performance for the second quarter of 2019, starting with As Michelle mentioned earlier, we had a strong Q2 twenty nineteen from a revenue perspective. Total revenues for the 2nd quarter grew 8% year over year to approximately $3,600,000,000. Overall, our MS business delivered revenues were approximately $2,400,000,000 in the second quarter of 2019, including OCREVUS royalties of approximately $183,000,000, growing 3% versus the prior year.
Global MS revenues in Q2 2019 were stable versus the prior year without OCREVUS royalties. US MS revenues in Q2 2019 were impacted by a decrease in channel inventory of approximately $25,000,000 compared to a decrease of approximately $50,000,000 in Q2 2018 and a decrease of approximately 175 quarter, we benefited from lower than anticipated discounts and allowances, which is not expected to continue for the rest of the year. Global Second quarter TECFIDERA revenues increased 6% versus the prior year, driven by revenue growth both in the U. S. And outside the U.
U. S. Tecfidera revenues were impacted by a decrease in channel inventory of approximately $10,000,000 in the second quarter of 2019, compared to a decrease of approximately $40,000,000 in Q2 2018 and a decrease of approximately $110,000,000 in Q1 2019. We were pleased to see our share of new prescriptions exceeded our share of total prescriptions. Additionally, our share of new prescriptions in the U.
S. For Tecudera is now at its highest point since the launch of OCREVUS. Outside the U. S, Tecnidere performed very well in Q2 2019. With continued volume increases across all large European markets and Japan versus the prior year, somewhat offset by pricing pressure in several European countries In total TECFIDERA delivered strong global patient growth of approximately 8% year over year.
Q2 global interferon revenues, including both Avanix and PLEGRITY, decreased 11% versus the second quarter of 2018, due to the continued shift from the injectable platforms to oral or high efficacy therapies. Within the U. S, Avenix and Plegrading were impacted by a decrease in channel inventory of approximately $5,000,000 compared to a decrease of approximately $10,000,000 in Q2 2018, and a decrease of approximately $50,000,000 in Q1 2019. Outside the U. S, interference revenues benefited by approximately 10,000,000 through channel dynamics within Europe.
Tysabri worldwide revenues increased 2% versus the second quarter of 2018, Within the U. S, Tysabri revenues were impacted by a decrease in channel inventory of approximately $10,000,000 compared to relatively stable levels in Q2 2018, and a decrease of approximately $15,000,000 in Q1 2019. We were pleased to see stability into Sabri Revenues in the U. S. Along with growth outside the U S versus the prior year.
We believe the recent launch of Mayzent has primarily impacted Gilenya so far. With minimal impact on Takeda and Tysabri in the second quarter. Overall, we were pleased with the execution of our MS franchise and the strong performance of our MS business in the second quarter. We continue to be focused on maintaining resilience and MS market leadership. Let me now move on to SPINRAZA.
Global 2nd quarter SPINRAZA revenues increased 15% versus the prior year to 480,000,000 In the driven by continued patient The number of patients on therapy in the U. S. Increased 4% as compared to the end of first quarter of 2019. Since its approval in late May, We have not seen children under two years old, which represents approximately 5% of the prevalent market. In the U.
S, we continue to make strong progress with adults. In the second quarter, we were pleased to see approximately 50% of new starts were adults, and the number of adult patients in the U. S. Increased by approximately 7% versus the first quarter of 2019. We still believe there's a large opportunity remaining as we've only reached approximately 20% of the adults in the U.
S. And as a reminder, this is the largest continuation rate is relatively low currently in the mid single digits on an annualized basis. Outside the U. S, Revenues increased 19% for the second quarter of 2018, driven by continued new country launches and increased penetration across all major geographies. In total, outside the U.
S, the number of commercial spinners with patients increased approximately 17% versus the prior quarter. We recorded revenues from over 40 international markets in the second quarter. During the past quarter, we secured broad reimbursement in the UK, Ireland and Argentina. As a reminder, we believe the global opportunity for SPINRAZA is significant and even greater than we had initially anticipated. We estimate that there are over 45,000 individuals with SMA in the markets where Biogen has a direct presence including attractive markets in Asia Pacific And Latin America.
Versus Q1 2019, ex U. S. Revenues decreased 13%. As we previously mentioned on our last earnings call, Q1 revenues benefited from a positive pricing adjustment of CHF 14,000,000 and the timing of shipments across several international markets, which can be lumpy at times, affecting the quarter over quarter comparison. In the second quarter, ex U.
S. Revenues were also impacted Although overall ex U. S. Revenues declined due to quarterly dynamics, excuse me, patient growth in the mid single digits across the larger, more mature European markets as well as Japan significant patient growth in Turkey and strong double digit patient growth across multiple markets see continued patient growth across the larger mature markets and continued rapid uptake from more recently launched markets. Given our expected continued patient we remain optimistic about our SMA business and its trajectory.
Let me now move on to our biosimilars business, which generated $184,000,000 this quarter, growing 45% versus the prior year. We estimate there are now over 170,000 patients using Denapali has continued to grow in volume and market share across Europe, strengthening its leadership position in markets such as Germany, the UK, Norway, and Denmark. We were pleased to report that Bene Poly has now become the number one prescribed Embro biosimilar across the major EU5 market. Plexana Beach volume grew 96% versus the prior year. Amerality volumes grew 40% versus 44% versus Q1 twenty nineteen, and it continues to be the leading launched HUMIRA biosimilar across Europe.
The Ameraldy auto injector has been well received in the market and continues to build on our success with metabolic and offering an improved patient experience at a lower price In a recent study comparing the Ameraldy auto injector device with the MURA device, 85% of nurses and 78% of patients prefer the Ameraldy device. Our Biosimilars business, along with SPINRAZA, have helped drive geographic diversification of our revenue base. We aim to Total anti CD20 revenues in Q2 increased 18% versus the prior year, primarily driven by OCREVUS Royalties. Q2 OCREVUS royalties benefited by approximately $17,000,000 due to adjustment related to prior periods, with continue to expect Rituxan revenues to be impacted by the entry of biosimilars in the U. S.
Beginning in fourth quarter of this year. Total other revenues in the 2nd quarter increased 47% versus the prior year. These revenues tend to be lumpy and difficult to predict. Let me now turn to gross margin performance. Q2 2019 gross margin was 87%, an improvement versus Q1 2019 following the sale of most of the remaining Bioverat inventory in the first quarter, which carried a very low gross margin.
Q2 GAAP and non GAAP RDA spends were both 13% of revenue. Q2 R and D benefited from both savings related to aducanumab as well as the timing of spend. As a reminder, The second quarter 2018 R and D expense included $324,000,000 related to the upfront payment to Ionis. Q2 GAAP R and D expense also included an additional $162,000,000 related to our equity investment in Ionis. Q2 GAAP SG and A was 16% of revenue, and non GAAP SG and A was 15 percent of revenue.
The increase in GAAP SG and A expense versus the prior year was primarily due to approximately $33,000,000 in acquisition related charges incurred in connection with our recent acquisition of Nightstar. Q2 GAAP other expense was $197,000,000, including $174,000,000 in net losses on investments, principally driven by a decrease in the fair value of our equity investment IONIS as well as the realized loss on the sale of IONOS stock versus the prior quarter. In Q2 twenty nineteen, non GAAP other expense was $19,000,000. In Q2, our GAAP and non GAAP tax rates were both approximately 14%. During the second quarter, we completed a change to our rate and a decrease of 430 basis to our non GAAP tax rate for the second quarter.
This benefit is not expected to recur post 2019. We repurchased approximately 10,400,000 shares in the 2nd quarter at an average price of $2.31 for a total value of approximately $2,400,000,000. We completed our 2018 share repurchase authorization, And as of the end of the second quarter, we had approximately $4,100,000,000 remaining on our 2019 authorization, which now brings us to our diluted earnings per share. In the second quarter, we booked GAAP EPS of $7.85, an increase of 88% versus the prior year and non GAAP earnings of $9.15, a 58% increase versus the prior year. As a reminder, Q2 2018 GAAP and non GAAP EPS were impacted by a total of $2.84 and $1.52, respectively, related to BG transactions affecting year over year compare We generated approximately $2,000,000,000 of net cash flows from operations in the 2nd quarter.
And this quarter, the contingent payments related to TECFIDR expired. We ended the quarter with approximately $4,300,000,000 in cash and marketable securities and $5,900,000,000 in debt. Let me now turn to our updated full year guidance for 2019. We expect revenues of approximately $14,000,000,000 to 14,200,000,000 which would represent year over year growth of approximately 4% to 6%, which is an increase from initial guidance of 1% to 3% growth. This range is driven primarily by uncertainty in channel inventory levels in the U.
S. At the end of the year. We anticipate GAAP and non GAAP R and D expense between 15.5% 16.5% of sales, a slight decrease from prior guidance. This reflects the savings from the termination of the Phase III studies of Dukinumab as well as additional operating expenses for the Nightstar programs we acquired. We expect GAAP SG and A expense to be approximately 16% to 17% of revenues, and non GAAP SG and A expense to be approximately 15.5 percent to 16.5 percent of revenues.
We expect our GAAP tax rate to be approximately 17% to 18% and our non GAAP tax rate to be approximately 15.5% to 16.5%. We anticipate full year GAAP Diluted EPS of $29.60 to $30.40, representing growth of 37% to 41% versus 2018. And non GAAP diluted EPS to be $31.50 to $32.30, representing growth of 20% to 23%, also an increase versus prior guidance. Of note, this guidance does not include any impact from potential acquisitions or large business development transactions as both are hard to predict. I'll now turn the call back over to Michelle for his closing comments.
Thank you, Jeff. Biogen demonstrated strong commercial execution this quarter and we continue to apply our world class capabilities and expertise to progress our pipeline, all while maintaining a diligent focus on continuous improvement and strategic capital allocation. Between now and the end of 2020, we expect continued progress as we aim to build limited franchise portfolio, including tend mid to late stage data readouts in MS, PSP, lupus, epilepsy, Parkinson's disease cognitive impairment associated with schizophrenia, stroke and organology and potential regulatory approval, in the U S for VUMERITY in MS. Finally, I want to reiterate our commitment to maximizing returns to our shareholders and bringing Novartis therapies to patients over the long term. These demands that we continue to look at capital efficiently, effectively and appropriately As we have demonstrated in the past, we will always strive to have an optimal capital structure as well as aim for super returns from the investment we make.
As we are closing a solid quarter, I would like to step back and comment on what we stand for as a company and how we conduct our business. We believe doing the right things for patients, employees, the environment and the communities we serve will help build sustainable value for all our stakeholders including our investors. After 41 years, we are extremely proud of our track record and commitment to sustainability. Finally, I would like to thank our employees around the world who are dedicated to making a positive impact on patients' lives and all of the physician caregivers and participants in our clinical development programs, our past and future achievements could not be realized without a passion and commitment. With that, we will
Our first question comes from the line of Cory Kasimov with JP Morgan.
Hey, good morning guys and thank you for taking my question. So I wanted to ask about SPINRAZA. And it sounds like there hasn't been an impact thus far from Zolgensma at least to date. But I'm curious if you're seeing any signs of potential warehousing of the minority portion of SMA patients that are currently eligible for gene therapy and how you're thinking about the growth outlook the product when considering a nice year over year jump in sales, but another quarter over quarter decline before competition potentially in? Thanks.
So Corey, this is Jeff. To this point, we don't see we haven't seen any indication that there may be any warehousing. I mean, difficult to tell, but there's no impact at this point in time. I mean, as we mentioned, patients were up pretty well year over year and they were up sequentially. And if you look at kind of the largest segment of that patient pool, which is the adult segment, at 60% of the market, we've only penetrated 20% of that.
And Zolgens was not indicated for that. So we think there's ample opportunity to grow within the U. S. And continue to kind of post unprecedented numbers. Outside the U.
S, the opportunity frankly is larger. If you look at the chart that we put out last quarter, we originally thought that the epidemiology within SMA was 20,000. We now think it's 45,000. So there's more patients outside the U. S.
Within the U. S. We continue to open up new countries and our experience in U. S. And in the large European markets, we'd indicate that we can continue to kind of penetrate mature markets and open up new markets.
So we think that it's a good growth opportunity in front of us.
Mike, Yes, Corey, I'll add to that, Will. I mean, clinically, one thing that's, that you need to consider on this is for what Zolgensma has indicated for is the under age 2, the more, usually the more severe SMA patients for which time is really critical. We know that the time of treatment even before symptoms, but certainly as a function of symptoms stage is really essential. So that would tend clinically to be very different from a typical kind of scenario where we might be waiting for a different new treatment.
So this is Michel. The underlying uptake of patients behind this very successful launch is the most, I would say, positive news in mature markets and in emerging geographies where we are gaining access. So we remain confident. Obviously, there are more clinical trials in that space too. And, and it's still the early days for this new therapeutic alternatives, and we welcome us for patients based on the severity of the disease.
Your next question comes from the line of Terence Flynn with Goldman Sachs.
Hi, thanks for taking the question. Maybe a 2 parter. Just wondering, Michelle or Jeff, if there are any additional steps you're considering to bolster your balance sheet here beyond the sale of the Hill Rom facility. And then, you were fairly active on the repo front this quarter. Just, should we expect that pace to continue through the second half of the year?
And should we read into it as a sign of confidence in your secondary IP? Thanks a lot. So one of the many hallmarks of the Biogen a company with very strong cash flows. We generated $3,400,000,000 of operating cash flow within the 1st 6 months. And we've now had the expiration of the Tech Padera Fumapharm payments.
So at this point in time, there's really no intent to kind of if you mean by change the balance sheet, lever up the balance sheet, but certainly not the intent that the company generates a lot of cash. With regard to uses of cash, I think we've been very consistent that our capital allocation strategy is centered around optimizing the capital allocation to maximize shareholder value. And we'll continue to do that. And we'll see the good thing is we've got ample capacity to do that either vis a vis share repurchase or continue to add assets to the clinical pipeline vis a business development or M and A. So I would look for us to be active across the board because we'll have the capacity, and it's a very strong company from that perspective.
Your next question comes from
I wanted to focus on TECFIDERA for a second. And it seems that a few ANDA filers have withdrawn their ANDA's and the case has been dismissed under a joint stipulation. So my question is, has there been a formal settlement? Because we haven't seen a press release Or did those end as just not meet by equivalents?
Thomas, this is Jeff. We're not going to comment on the specifics of our situation, only to say that as Michelle had said, a lot of interest in kind of getting it resolved.
Your next question comes from the line of Geoffrey Porges with SVB Leerink.
Thank you very much for taking the question and congratulations on the good numbers in the quarter. I suppose I have to follow-up on aducanumab. Previously, you disclosed that you were continuing to monitor the patient's in the study and to see whether there was any evidence of clinical effect, from the in the pivotal studies, with prolonged exposure. Could you share with us what you have found with that extended follow-up? And secondly, in that context, how much you continuing to invest in the amyloid hypothesis, and particularly in 2401 elenbecestat Could you kind of reconcile those 2 for us?
Thanks.
Geoff, thank you for asking this important question. Obviously, since we did not present at AIC, it's clear to everybody that we are not ready. We are not finished with our analysis, of the data, first available at the cutoff date of the futility analysis, but also the data that is coming after the cutoff date of the futility So Biogen said, and we'll continue to follow the science. And these analysis are of critical importance, as you can imagine, for the patients, for the community, for public health and also for all the stakeholders. And at the same time, Biogen is trying to reach new frontiers, which is difficult to define So we will present the results of ENGAGE and EMERGE studies at the future medical meetings.
And I hope you appreciate that we cannot say much more at this stage.
Your next question comes from the line of Michael Yee with Jefferies.
I had a question for Al Sandrok if he's there, or Mike, but that was regarding the comments around BIIB092, the TAO PSP study. I know you completed enrollment, I guess, late fall last year, so the date is coming like you alluded to. Maybe just talk to, how we should put into context of phase 2b, how much confidence you would have on the endpoint, but perhaps more importantly, if there are pre specified endpoints you're looking at subgroups, what's important to you to define supporting the tau hypothesis for tauopathies?
Michael, this is Al. So the we've been saying that the results will be available at later this year toward the end of this year. As you know, in the earlier phase studies, we showed about a 90% decrease in CSF Free tau. Old cows. And so we definitely have target engagement because the antibody was given intravenously and we looked in the CSF at Tiles.
So we have target engagement in the CNS. What we're hoping to see is an effect on a rating scale for PSP, which is not that different from the Parkinson's rating scale. As you know, there are, it has many of the shares, many of the features of Parkinson's disease, but there are some additional features that relate to PSP that will also be measured. And, yeah, the big question right now is we have target engagement. We have lowered CSF tau.
We're hoping to catch the tau as it spreads. The abnormally, the misfolded tau that spreads from cell to cell is a lot of great data that there's PRIME like propagation in the CNS in PSP and, in other tauopathies. And we'll see whether or not we catch it in as it tries to spread and have a clinical effect.
Your next question comes from the line of Ronny Gal with Bernstein.
Good morning and thank you for taking my question. Just a couple of quick things on the pipeline. On the PSP trial, just following on Corey, how many of those patients had a tau in their brain by imaging? I know that wasn't available ahead of the trial, but I suspect you did it during the trial. And second, Mike, I noticed you upped your investment in Skyhawk a couple of weeks ago.
At care to share with us roughly how long before you'll have an oral SMA product in the clinic?
Question, I'll take both of those. First of all, just one point of clarification with the tauopathy and PSP, the current pet imaging tracers for tau, don't recognize the form of tau that accumulates in PSP recognizes the form of tau that accumulates in Alzheimer's disease. This has to do with the 3 R versus 4 R tau. And so just to clarify that, none of them would have been image because there hasn't been an ability to image TOW in the brain for that. On Skyhawk, the collaboration is proceeding very nicely.
We're working on several targets with them. We're zeroing in on potential new clinical candidates. We don't have a timeline just yet, but I would say that we're very, very happy with the progress on, on many targets in this way. And we hope to get some to the clinic over the next couple of years, let's say.
Your next question comes from the line of Phil Nadeau with Cowen and Company.
Good morning. Thanks for taking my question. Just one question on the Evolve MS-two trial. You mentioned the data is going to be over the next few weeks. Could you remind us of the design of the study And in particular, aside from GI tolerability, what other data is going to be disclosed in the top line release?
How you would frame risk benefit, that's likely to come out of the study. So what would be a meaningful GI tolerability improvement in your minds?
Hi, Phil. This is Al Sandrock. So, it's basically a head to head study, again, tech Federa. The primary outcome measure is a patient reported outcome on GI tolerability. And where we're looking at essentially all aspects of GI tolerability, whether it's upper or lower, the severity, the duration And hopefully what we'll get at the end of it is an incidence, an idea of the difference in the incidence of GI tolerability events, between comparison with TECFIDERA as well as severity.
And then talking to our the prescribers, the MS prescribers, incidence is probably the most important thing, although ultimately, you want to try to improve compliance. So we'll also be looking at things like discontinuation rate, which, as Mike said, in the EVOLVE-one study, we had a very low discontinuation rate So, so we're hopeful that we'll see, a nice comparison to TECFIDERA in this EVOLVE 2 study.
Your next question comes from the line of Matthew Harrison with Morgan Stanley.
Great. Good morning. Thanks for taking the question. I just wanted to follow-up on something Phil just asked. Can you just talk if you're able to achieve the profile that you've talked about with VUMERITY in terms of, let's say, lowering of incidents.
I mean, how does that impact how you think about the drug commercially? Would you expect to be able to try and switch tech fed their patients who are already stable? And because I know most of the GI effects come early in the drug, or how should we think about normality commercially if you're able to achieve that profile? Thanks.
So thanks for the good question. Obviously, we need to consider the outset that the patients on TEC after the 4, 5, 1st week are stabilized and they're doing fine. So the strategy is not to switch. The strategy is to expand.
Yes. I mean, most physicians that I talked to, would not want to switch somebody who's done well, who's stabilized, the initial phases of taking TECFIDERA and we're doing well. In terms of tolerability. Of course, if there's breakthrough disease, you would consider switching, probably to a different mechanism action.
Your next question comes from the line of Salim Syed with Mizuho.
Hey, guys. Thanks for taking the question. Mike or Al, I had a question for you actually. You guys have mentioned in the past, I believe, that you are looking at new MS targets. I was curious what your thoughts were on EBB as a target.
Thank you.
Yes, so this is Mike. Look, I'll say this has been a longstanding interesting hypothesis. We've really, rejuvenated our effort on early targets in MS and novel targets, including some things that might be virally based another cell based, so early days in a lot of that, but we've created a new highly dedicated group, focused early stage MS research and novel mechanisms. And so where we see an opportunity, independent of modality, we will advance that.
The EBB is a very interesting virus. If you look at, epidemiological studies in MS, particularly out of Harvard School of Public Health, it's there's a strong implication that EDV infection precedes the onset of MS It's very tantalizing that the B cell follicles that are in the CNS and the submillangeal space Generally, they're EBB positive. EBB affects B cell function. And B cells are obviously important in MS as seen by All the drugs that are directed against B cells, Ocrelizumab and BTK inhibitors that seem to have efficacy. So So I think in some ways, EPV is very interesting as a causal virus.
However, in terms of treatment, once the virus activates the immune system toward an autoimmune state, I don't know whether getting rid of the virus will help. These B cell follicles in the CNS, perhaps getting rid of the EBV positive B cells there may be helpful. But the treating the virus itself, you'd have to design a study very, very early, perhaps even before MFC even starts.
Your next question comes from the line of Brian Abrahams with RBC Capital Markets.
There. Thanks for taking my question. Appreciate the strategic updates and congrats to Joe on his new role. You talked about immunology as a more formalized area of focus. I was wondering if you could speak a little bit broadly about how you plan to approach the space maybe which of your assets you expect to prioritize?
And then potential BD and future commercial strategy, that you're thinking about within immunology?
Sure. Brian, this is Mike. I'll start out with that. So, we're very happy about this. Where we're going to start with focuses where we've got existing assets and or expertise.
By and large right now, that's really going to start with our lupus programs and include VIB 59 bdCA2 antibody and dapirolizumabpegol, this anti CD40 ligand, fab And from that, we will look at things that touch on that, either within that indication space or perhaps in and around those mechanisms to expand it will start with those places where we've got existing assets under capability. We think it fits very nicely with a lot of the ongoing programs and things that we're otherwise doing. It also, I'd say on the business development front, does give us an ability to look somewhat more broadly at external opportunities that we might be able to use for early either early or late supplementation of the pipeline.
Your next question comes from the line of Paul Matteis with Stifel.
I wanted to ask a question on business development. What is Biogen's thinking on the ongoing delays with the Rose Spark deal and what that might mean for your ability to do M and A in areas where you already have a strong presence. For example, you have a pretty broad pipeline and assets either in your pipeline or marketed in a lot of areas of neurology. Does the delay that's going on, which seems to be about therapeutic overlap make you at all reluctant to be more aggressive in M And A in areas where you already have a presence. How does this complicate things if at all?
Thanks.
So it's always difficult to kind of, I think what you're getting at is kind of antitrust. I think we'll take a careful approach as we look at business development, but we don't see that as a deterrent to be active from a BD or M and A perspective, but we'll certainly be careful as we kind of look at targets.
Your next question comes from the line of Evan Sigerman with Credit Suisse.
One for Al or Michael. So with the recent failure of a base inhibitor reported by Amgenin Novartis, why does Biogen continue to pursue development at elenbecestat? And generally given the failure of A beta antibodies, what gives you confidence that targeting tau
is the right approach for AD? So Evan, why don't I take a beginning of this? Of course, we're highly aware of all the announcements in around base inhibitors and the recent Novartis and Amgen announcement of the termination of their, discontinuing their base inhibitors. So we're highly aware of this. I would say You know, patient safety is paramount in our clinical trials, including the mission 81 and mission 82 trials, the base inhibitor that is being conducted in collaboration with our collaboration partner A side.
Studies have an independent data and safety monitoring board that reviews the data regularly from those phase 3 studies. And to date, the DSMB recommended the studies proceed, they have an ability to look at that data when they want. And, and they're certainly aware of, likewise, the safety signals and discontinuation of other programs, and they will be assessing it as it goes along. As to BAN2401, I'll refer back to what Michelle commented on earlier, which is that we're in the midst of a very thorough analysis of all the engaged and data from aducanumab, which is an extensive data set, and we would like to have a full understanding of that data before we make specific forward development decisions on VAN2401.
I think we have time for about 2 more questions.
Your next question will come from the line of Carter Gould with UBS. Great.
Thanks guys. I guess from Michelle and Michael. As far as your comments earlier around rebalancing the risk reward of the pipeline, it sounded like that was really kind of externally focused, but I wanted to ask if there's any sort of thoughts on the way to also revisit maybe already existing programs and any change there in sort of the hurdle for moving programs forward? Any color there would be appreciated. Thank you.
Yes, Carter. Good question. So I mean, a few things you'd say to maybe flesh it out a little bit. I mean, we've had an ongoing effort over some time to really look at the risk reward profile. And that means to be able to balance risk in different categories in include things like seeking later stage assets where we can, taking advantage of unique capabilities, where we see them leveraging our depth in certain areas like MS and neuromuscular, where we've got, very strong franchises.
And likewise going after the types of diseases where we've got high confidence, things where they're you've got genetically defined targets and genetically defined patient populations. And you can see examples of that in our pipeline, that have been very intentional. These include things like Lunarity, as a very good example of rebalancing risk, supporting our MS franchise. I think you see that within our Nightstar acquisition and the mid to late stage clinical programs in gene therapy there, carotidoremon, excellently retinitis pigmentosa, and hopefully that came across in my emphasis on our confidence in our ASO platform and ASO programs that we've been advancing in collaboration with IONIS. In addition to that, I think, and Michel spoke to this, we look to our important clinical readouts, our 10 upcoming clinical readouts in the next 18 month trigger points to help define and refine the areas that we really wanna concentrate resource and activity on in the future.
If I
may just add to the good comments made by Mike, it's also the opportunity to widen the strategic lands. And important readout in the coming months with a bid 59 in lupus. So stay tuned.
Our final question will come from the line of Mohit Bansal with Citigroup.
And a very warm welcome for to Joe from our side as well. So quickly on guidance, appears to be indicating a slight decline or maybe flat revenues in the second half versus the first half. You mentioned inventory But could you please provide a little bit more granularity on the process or thought process for the remainder of the year? Is it biosimilar, which is a bigger factor here? Thank you.
So we're not, we don't, we have a policy of kind of giving guidance twice a year doing it by the product level, but what I can do is kind of maybe point you to some areas within historical numbers Certainly in the first quarter, bioverativ inventory sale certainly helped the first quarter inventory growth. You have to look at that. That was a one time type element. We also in the 2nd quarter, the MS business was quite strong as a result of the less of an inventory drive down and some gross to net favorability. Which we don't expect to continue.
And then 2 other factors that I would highlight is SPINRAZA will face some more difficult comparisons in the second half of this year. Compared to the second first half of this year, the numbers get bigger. And then finally, the Rituxan and Gazyva, we've said all along that we expect competition to come in in the fourth quarter. So if you look at all those factors, it would indicate there would be a little bit more strength in the first half versus the second half.
Got it. Very helpful. Thank you.
Yes. So thank you all for attending our call today. Another very strong quarter for our company. Very exciting times at Biogen nowadays. Thank you.
Talk to you soon.
Ladies and gentlemen this will conclude today's call.