Good morning. My name is Dan and I will be your conference operator today. At this time, I would like to welcome everyone to the Biogen Third Quarter 2018 Financial Results and Business Update.
Questions.
Thank you. I would now like to turn the conference over to Mr. Matt Calist Vice President, Investor Relations. You may begin your conference.
Thanks, Dan. Thank you, and welcome to Biogen's third quarter 2018 earnings conference call. Before we begin, I encourage everyone to go to the Investors section of bijan.com to 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 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, Michelle Penazzos Doctor.
Michael Aylors, 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 Sanrock. Before I conclude, I would also like to remind everyone that we now post releases related to earnings calls and investor events on the Investors section of Biogen's website, www.biogen.com and issue statement on Twitter when they become available. We do this instead of publishing earnings releases and any releases related to investor events and earnings calls via newswire services.
Our Twitter handle is at Biogen. Now, I'll turn the call over to Michelle.
Good morning, everyone, and thank you for joining us First, let me begin with some financial highlights. Compared to the same period a year ago, Biogen's 3rd quarter revenues grew 12%. To $3,400,000,000. 3rd quarter GAAP earnings per share grew 24 percent to $7.15 and non GAAP EPS grew 17 percent to $7.40 We are pleased with this year over year double digit top line and bottom line growth as we continue to execute on our strategy to solidify our long term leadership position in neuroscience. Now let me review the accomplishments we delivered in third quarter.
First, our MS core business, including OCREVUS royalties, remained stable versus the prior year and delivered revenues of $2,300,000,000. The number of patients on our MS product globally also remained relatively stable versus the prior year. In the U S, we saw improving trends for both TECFIDERA and Tysabri on a year over year basis. Outside the U S, we continued to add patients across multiple geographies. 2nd, SPINRAZA.
Global revenue grew to $468,000,000, driven by quarter over quarter and year over year revenue growth in the US and even greater revenue growth outside the US. The number of commercial patients on SPINRAZA increased by approximately 20% from last quarter. And we now have close to 6000 patients on SPINRAZA, including the Expanded Access Program and clinical trials. In the US, we continued making progress with adults in the third quarter more than 50% of new starts were adults, increasing the number of adult patients on SPINRAZA by more than 20% compared to last quarter. Outside the US, the pace of reimbursement for SPINRAZA across multiple geographies led to meaningful revenue growth with significant revenue contribution not just from Europe, but also from Asia Pac and Latin America.
We have received regulatory approval in 5 more countries, and we have made 2 more regulatory filings We also secured formal reimbursement in 4 additional countries, including Canada and now have formal reimbursement in 28 markets. We were very proud to announce new data from the NUTURE study of SPINRAZA, Of the 25 presymptomatic infants, we genetically diagnosed SMA that were treated with SPINRAZA many were achieving milestones consistent with normal development. All the patients were alive without ventilation and able to sit without support. 22 patients or 88% were able to walk either with assistance or independently and 88% showed normal a broad patient populations underscore the compelling efficacy profile of SPINRAZA. This is the kind of innovation and progress that inspires us to tackle some of the most difficult and challenging disease areas within neuroscience.
3rd, we continue to develop our neuroscience pipeline as we look prioritize our investments towards areas with the highest probability of success, while building depth in core areas of expertise. Within MS and neuroimmunology, we are working to expand our long term leadership position And this quarter, we completed enrollment of the phase 2 trial of Opicinumab, a potential remediation therapy. Along with SI, we are presenting data this week for our industry leading Alzheimer's disease portfolio at the sita meeting in Barcelona. We are building for the depth in neuromuscular diseases with a initiation of a phase 1 trial of BIIB-seventy eight and ASO targeting C9 of 72 the most common genetic cause of ALS. And we continue to be optimistic about the potential for B67 targeting SOD1 for ALS.
We are making notable progress in movement disorders having completed enrollment in the phase 2 trial of B92 and anti tau antibody in progressive supranuclear palsy or PSP. BIP 92 has been granted fast track designation from the FDA. We also continue to advance BIP 54 in phase 2 for Parkinson's disease. Within our emerging growth area of acute neurology, we dosed the 1st patient in our Phase III trial of BIIB093, a first in class IV glibentamide for large hemispheric infarction. And beyond our neuroscience pipeline, we initiated a Phase 2b trial of BG11 in idiopathic pulmonary fibrosis.
Mike will provide more details on the development across our entire pipeline. Our biosimilars business grew revenues to $135,000,000, which represents 33% growth year over year. We believe that there are now more than 100,000 patients treated with our biosimilars in Europe. Last week, we launched in Halby, our adadimimumab biosimilar referencing EMRA with an originator market of approximately $4,000,000,000 per year in Europe, Im Mahaldi is now available in several European markets within Mahaldi. We are now able to offer biosimilars of the 3 main anti TNFs providing physicians with more options to meet the needs of patients.
We believe the significant savings from biosimilars in European markets can create headroom for innovative therapies. As a reminder, we exercised our option to own approximately 49.9% of the Samsung BioIP joint venture and we expect this transaction to close by theendoftheyear. Importantly, our cash generation remained very strong and continue to provide us with significant optionality and flexibility to allocate capital. Since the beginning of the year, we have completed 5 business development deals and repurchased 10,500,000 shares. During the third quarter, we generated $1,700,000,000 in cash flow from operations.
We continue to diligently evaluate new opportunities for potential business development and M and A. And our board has authorized is $3,500,000,000 share repurchase program. As we have demonstrated in the past, we are committed to maximizing returns for our shareholders, while continuing to bring innovative therapies to patients. Something that demands a thoughtful approach towards all our investment over both the short and the long term. In summary, Biogen executed on strategy and continued to deliver noticeable progress.
Our core MS business demonstrated resilience SPINRAZA continued to grow in the U. S. And even more so outside of the U. S. And we remain committed to our goal of being the long term standard of care in SMA.
We initiated a new study in ALS and completed enrollment of studies in MS and PSP as we aim to develop our neuroscience portfolio and build depth in our most promising core and emerging growth areas. We grew our biosimilars business and have launched Imhaize in Europe. We are actively implementing a leaner and simpler operating model. And we generated ample cash as we focus on strategically allocating capital to develop and build depth in our neuroscience portfolio again with the goal of maximizing shoulder returns and bringing innovative therapies to patients. I will now turn the call over to Mike for a more detailed update on our recent progress in R&D.
Thank you, Michelle and good morning, everyone. In the third quarter, we made important progress across our differentiated neuroscience pipeline, including our industry leading Alzheimer's disease portfolio. So I'm delighted today to review advances we made across our core and emerging growth areas as we prioritize our activities and build depth trials in Alzheimer's disease meeting or CTAD on the safety and efficacy of aducanumab, our monoclonal antibody that binds soluble and insoluble aggregated form of beta amyloid, including oligomers, protofibrils and fibrils. These presentations will include a 36 month analysis of the aducanum titration dosing regimen and a 48 month analysis of the fixed dose cohorts, both from the long term extension of the phase 1b PRIME study of with early Alzheimer's disease. The results are generally consistent with previous interim analyses and there were no changes to the risk benefit profile of aducanumab.
Live webcasts of our oral presentations, as well as an investor Q and A call, will be available on the Investors section of our website. Also at CTAD, our collaborator, Eisai, will present clinical and biomarker updates from the phase 2 study of BAN2401. These results will be presented in an oral session at CTAD and a live webcast of the presentation will be available on Eisai's website. Additionally, Eisai will present safety and efficacy data from the phase 2 study of elenbecestat, a small molecule based inhibitor being evaluated in 2 phase 3 studies in patients with mild cognitive impairment or mild dementia due to Alzheimer's disease. In parallel to advancing Phase III clinical development of aducanumab, We are also planning to initiate Evolve, a Phase II study designed to assess the clinical relevance of asymptomatic amyloid related imaging abnormality or Aria.
Aducanumab has been generally well tolerated in patients with Alzheimer's disease, with ARIA being the primary safety and tolerability finding. The goal of Evolve is to test the hypothesis in a prospectively designed study that continuation of dosing with aducanumab in the absence of symptoms does not have clinically impactful safety outcomes. Beyond beta amyloid, we are advancing a number of assets targeting tau, which we believe plays an important and complementary role in Alzheimer's disease pathogenesis. Specifically, we continue to advance BIIB0.76 and BIIB092, both anti tau antibodies as well as BIIB080 antisense oligonucleotide targeting tau production. We expect full data from the phase 1 study of BIIB-seventy six in early 2020.
Turning to MS and neuroimmunology. This quarter, we completed enrollment of Afiniti, a 72 week Phase 2b study of opicinimab as an add on therapy disease modifying therapies for relapsing remitting multiple sclerosis. Opicinimab is a 1st in class human monoclonal antibody directed against lingo-one and is being evaluated to determine its potential for improving pre existing disability in relapsing MS patients through Remyelination. Enrollment of Affinity was completed approximately 7 months ahead of schedule, and we expect data in mid-twenty 20. We continue to advance Droximel fumarate or BIIB098 in collaboration with Alkermes as a new oral option that may provide benefit to many MS patients.
We are currently enrolling patients in Part B of the head to head tolerability study versus TECFIDERA with data expected in mid-twenty 19. This study is employing an adaptive trial design in which results from Part A were used to inform Part B and we have used this approach to update the endpoints and increase the sample size by 80 patients to 500. In parallel, Alkermes expects to submit the NDA for BIIB98 to the FDA by the end of this year potentially positioning us for a U. S. Approval by early 2020.
We are committed to expanding our leadership position in multiple sclerosis and we believe this presentations at the 34th Congress of the European Committee for Treatment And Research in MS or Etrums in Berlin. Key updates included results from the ENDORE study, which demonstrate that the clinical benefits of TECFIDERA in newly diagnosed patients were maintained throughout 9 years of continuous treatment. Additionally, an analysis from the Tysabri observational program reinforced the long term safety and consistent effectiveness of Tysabri over 10 years. We also presented data on serum neurofilament light or NFL as a biomarker of disease activity in MS. Data indicated that serum NFL levels above a certain threshold were associated with gadolinium lesion count and new T2 lesion development.
The number of patients with serum NFL levels above this threshold was significantly decreased following treatment with disease modifying therapies, particularly Tysabri. Turning to our progress in movement disorders. This quarter, we completed enrollment of a phase 2 study of our anti tau antibody BIIB92, for the treatment of progressive super nuclear palsy, a rare and devastating neurodegenerative disease in which tau pathology is believed to be the primary driver of neurodegeneration. BIB-ninety two has been granted fast track designation by the FDA and results from this 52 week study are expected in the second half of next year. Combined with our potentially best in class anti alpha synuclein antibody BIIB-fifty four, which is actively enrolling in a phase 2 study for Parkinson's disease, we are leveraging our core neuroscience expertise to build depth and movement disorders.
We also see strong R and D momentum within neuromuscular disorders. We continue to build on the growing body of clinical evidence for SPINRAZA as the standard of care in spinal muscular atrophy. Earlier this month, at the annual Congress of the World Muscle Society, We presented new interim results from NURTURE, an ongoing open label single arm efficacy and safety study of SPINRAZA in presymptomatic infants with genetically diagnosed SMA. As of May, all patients in the study were alive and none required tracheostomy or permanent ventilation. 22 of 25 participants were able to walk either with assistance or independently according to the motor milestone standard of the World Health Organization and all were able to sit without support.
Additionally, assessment of Bullbar function revealed that 22 of 25 patients achieved a maximal score on the Hammersmith infant neurological examination section 1 evaluation of the ability to suck and swallow. Participants were also evaluated for motor function using the CHOP INTEND scale out of a maximum of 64 points MEAN CHOP INTEND scores were 62.6 for study participants with 3 copies of the SMN2 gene, and 61.00 for those with 2 copies of the gene. We believe these data underscore the unprecedented efficacy profile of SPINRAZA as the standard care and SMA with many patients achieving milestones consistent with normal development. We estimate that the majority of the treatable infant population is already being treated with SPINRAZA across multiple geographies. In our efforts thecal dosing for patients with scoliosis or spinal fusions.
We have seen meaningful progress in the field, including a recent publication out of Phoenix Children's Hospital outlining a potential treatment paradigm to dose patients with complex spines. This site noted the successful administration of 104 doses amongst 26 children with 100 percent technical success, utilizing techniques such as imaging directed injection or catheter placement for patients with complex fines. We are highly encouraged by the strong response to the SMA clinical community and excellent outcomes that have been achieved to make treathecal delivery, a routine procedure for SMA patients. Today, we estimate there have been over 30,000 injections of SPINRAZA performed globally and we believe intrathecal injections may become widely used for severe neurological diseases beyond SMA. As previously communicated, the IND for our SMA gene therapy program is currently on clinical hold in the U S.
Through additional interactions with the FDA, we have learned that the agency has questions regarding our preclinical data package. We are disappointed with these developments and we are currently assessing options to determine the extension survival path forward. Beyond SMA, we continue to progress our phase 1 study of BIIB067 and ALS patients who harbor mutations in superoxide dismutase 1 or SOD1, a genetic cause of familial ALS. BIIB067 is an antisense oligonucleotide designed to directly target and reduce SOD1 expression. In addition to BIIB-sixty seven, we have expanded clinical development within genetically defined subpopulations of ALS patients as we build depth in this indication.
In collaboration with IONIS, this quarter we dosed the 1st patient in the phase 1 trial of BIIB078. An antisense oligonucleotide designed to selectively target hexanucleotide repeat expansion in the chromosome 9 open reading frame 72 gene, or C9 ORF-seventy two, the most common genetic cause of ALS. BIIB078 selectively targets C9 ORF-seventy two transcript that contain hexanucleotide repeat expansions for degradation and may thereby mitigate C9orf72 mediated pathology. These programs highlight our continued commitment to targeting the genetic origins Moving to acute neurology. We continue to advance BIIB093, our 1st in class IV clavenclimide therapeutic for the prevention and treatment of cerebral edema associated with large hemispheric infarction.
In the third quarter, we dosed the 1st patient in charm, the phase 3 trial of BIIB093, and we look forward to progressing this novel therapeutic approach in this severe stroke population. Along with our phase 2 TMS-seven program, we are encouraged by the potential to advance innovation in this area of significant unmet medical need. Within neuropathic pain, We recently received the results from the Phase 2b study of VIX OTRA gene or VIVV74 in painful lumbosacral radiculopathy or PLSR. While the safety data were consistent with the safety profile reported in previous studies, the study did not meet its primary or secondary efficacy endpoints, and we will be discontinuing development in this challenging indication. We expect to report more detailed results of this study at a future scientific forum.
We continue to enroll a phase 2 study in small fiber neuropathy. In parallel, we have continued our FDA interactions regarding the design of the potential phase 3 studies in trigeminal neuralgia. We will delay phase 3 initiation as we await the outcome of these ongoing regulatory interactions, a more detailed review of the PLSR data and insights from the ongoing small fiber neuropathy study. Outside of our core neuroscience focus, we have continued to advance a small number of legacy programs where the science remains compelling and we believe safety and efficacy of dapirolizumab Pegol, an anti CD40 ligand pegylated fab in adults with moderately to severely active systemic lupus erythematosus, despite receiving standard of care treatments such as corticosteroids, anti malarials, and non biological immunosuppressants. The primary endpoint of the study to demonstrate a dose response at 24 weeks on the British Isle's lupus assessment group based composite lupus assessment was not met with for the majority of clinical endpoints in patients treated with dapirolizumab Pegol compared with Placebo.
In addition, biomarker data demonstrated evidence of proof of biology. Daprolizumabpegl was well tolerated and demonstrated an acceptable safety profile. We continue to further evaluate these data while assessing potential next steps. In addition, this quarter we dosed the 1st patient in the Phase 2b study of BG11, otherwise known as STX-one hundred. A humanized monoclonal antibody directed against the alpha V beta-six integrin in patients with idiopathic pulmonary fibrosis or IPF.
Primary endpoint of this 52 week study is the yearly rate of change in forced expiratory vital capacity, an established measure of pulmonary function in IPF. BG11 previously demonstrated compelling proof of biology via substantial down regulation of the TGF beta pathway in IPF patients as measured by inhibition of phosphorylated smad and alveolar macrophage is isolated by bronchial alveolar liposch. Overall, this quarter, we announced the 1st patient in a Phase III stroke study reported compelling data supporting SPINRAZA as the standard of care in SMA, initiated 2 new clinical trials, completed enrollment in 2 phase 2 studies, and continue to make rigorous data driven decisions on clinical development across our portfolio. Our aim is to continue building and transforming the lives of millions of patients living with neurological diseases. I will now pass the call to Jeff.
Thanks Mike Good morning, everyone. I'll now review our financial performance for the third quarter of 2018, starting with revenues. Total revenues for the third quarter were 3,400,000,000 growing 12% year over year. Starting with our MS franchise revenues. Overall, our MS business delivered revenues of 2.3000000000 in the third quarter of 2018, including OCREVUS royalties of approximately $137,000,000.
MS revenues in the third quarter of 2018 were down 3% for our year without OCREVUS royalties and were relatively stable, including OCREVUS royalties. In the U. S, channel inventory levels were relatively stable for TECFIDERA, Avanix and PLEGRITY combined. Versus prior year, foreign exchange rates and hedging had a minimal impact on ex U. S.
MS product revenues for the third quarter. Global 3rd quarter Tecadero revenues were $1,100,000,000, a 2% increase versus the prior year. This included revenues of $842,000,000 in the U. S. An increase of 1% versus the third quarter of 2017 $248,000,000 outside the U.
S. An increase of 6% versus the third quarter of 2017. On a year over year basis, TECFIDERA revenues were relatively stable in the U. S. Versus the declines we saw in the 1st and second quarters.
In addition, we were very pleased with Technicolor's performance outside the U. S. Driven by year over year patient growth and particularly strong performance in Japan, where TECFIDERA has now reached over 25% market share. Even though trends outside the U. S.
Were strong, it's important to note Q3 ex U. S. Tepidar revenues were negatively impacted by ongoing price decreases in certain European countries. Tysabri worldwide revenues were $470,000,000 this quarter, relatively stable versus the third quarter of 2017. This included $253,000,000 in the U.
S. And $217,000,000 outside the U. S. In the U. S, revenues declined 5% versus the prior year, primarily due to the launch of OCREVUS The Sabre's relative performance continues to improve on a year over year basis after declining 8% in the second quarter of 2018, and 18% in the first quarter of 2018 versus prior year.
Outside the U. S, Tysabri revenues increased 7% versus prior year. Desiree patients increased in all major European markets versus prior year, except for Germany, where we've seen a moderate impact from the launch of OCREVUS. Dysabri also benefited from strong double digit patient growth in emerging markets. Interferon revenues, including both Avanix and PLEGRIDY $590,000,000 during the third quarter, a decrease of 11% versus the third quarter of 2017.
This decline was primarily driven by lower volumes as the market continues to move towards orals and high efficacy therapies. Interferon revenues included $421,000,000 in the U. S. And the $169,000,000 in sales outside the U. S.
Overall, MS revenues, including our royalties on sales of BrokerVISS were stable versus prior year. Moving forward, we expect continued stability through the balance of the year as we expect the OCREVUS impact to be less significant on a year over year basis. And we anticipate a moderate inventory channel build in the fourth quarter in the U S. Let me now move on to SPINRAZA. Global third quarter SPINRAZA revenues were $468,000,000.
This included revenues of $224,000,000 in the U. S, representing 9% growth as compared the 2nd quarter $244,000,000 outside the U. S, representing 12% growth compared to the 2nd quarter. Number of patients on therapy in the U. S.
Increased by over 10% as compared to the end of the second quarter. Discontinuations remained relatively low and continue to be driven primarily by mortality. We continue to believe there is significant opportunity in adults in U. S, and are very encouraged by the progress we're making. The number of adults on therapy in the U.
S. Grew by over 20% for the 2nd quarter and in the 3rd quarter or over half the new patient starts in the U. S. Were adults. In the U S, we estimate we now have reached approximately 50% of all infants and pediatric patients.
And we estimate we've reached approximately 15% of adults, an increase from approximately 10% in the 2nd quarter. We estimate that about a third of our U S. Patients on therapy are now adults. As a reminder, our data indicates approximately 5% of the prevalent SMA population of infants, 35% are pediatric patients, and 60% are adults. Highlighting the large number of untreated adult patients that we believe could benefit from SPINRAZA.
We saw a continued increase in the revenue contribution from maintenance doses this quarter. In the U. S, approximately 60% of SPINRAZA units in the 3rd quarter were attributed to maintenance doses as compared to 55% in the 2nd quarter. In the third quarter, the average doses per patient was approximately 1.1, roughly the same as the 2nd quarter. In the third quarter, approximately 15% of U.
S. SPINRAZA units were dispensed through our free drug program, similar to the 2nd quarter and a decrease from approximately 20% a year ago. We continued to see improved insurance coverage in the U. S. As policies broadened their coverage criteria.
We believe the inventory levels for SPINRAZA were relatively flat in the third quarter. We saw an increase in discounts and allowances of approximately 100 basis points versus the 2nd quarter due primarily to increased treatment through 340B hospitals. If a similar free drug percentage is maintained, and with continued progress in treating adults, we expect to show stability in U. S. SPINRAZA revenues in the 4th quarter compared to the 3rd quarter.
Recognizing there may be some seasonal dynamics impacting quarterly revenue trends. Outside the U S, the number of commercial INRAZA patients increased approximately 29% versus prior quarter. And there are approximately 290 patients active in the Expanded Access Program. We recorded revenues from over 30 international markets, with approximately 75% of ex U. S.
SPINRAZA revenue in the third quarter coming from Germany, Italy, Japan, Brazil, Spain, France and Australia. We continue to believe that the international opportunity for SPINRAZA is even greater than in the U. S. As we continued the momentum of the new country launches and we believe there is significant ex U. S.
Opportunity, not just in Europe, but also in Asia Pacific and Latin American markets. We expect to see continued Let me now move on to our biosimilars business, which generated $135,000,000 in revenues this quarter, a 33% increase versus the prior year We believe that there are now more than 100,000 patients treated with our biosimilars in Europe. And Nepal continues to be the market leader in countries such such as the UK, Denmark and Norway and exceeds 40% volume share in Germany, Italy and Sweden. The second quarter, mostly in Italy. Last week, we launched in Meraldi, our biosimilar Repligen HUMIRA, which is now available in several European markets.
Overall, we expect relatively stable biosimilars revenue in 4th quarter compared to the 3rd quarter. Turning to our anti CD20 revenues. We recorded $512,000,000 in 3rd quarter, an increase of 26% versus the prior year, primarily driven by OCREVUS royalties. This includes our estimated OCREVUS royalties of $137,000,000 for the 3rd quarter. It's important to note that typically the 4th quarter includes an inventory drawdown for Rituxan.
In addition, we continue to monitor potential new biosimilar entrants, which could begin impacting Rituxan revenues in 2019. Total other revenues were $147,000,000 in the third quarter, more than 3 times what we recorded in the third quarter of 2017, as we continued to benefit from greater contract As a reminder, we believe that the fourth quarter of 2017 revenues were abnormally high due to the timing of contract manufacturing, creating a difficult comparison for the fourth quarter of this year. Q3 GAAP and non GAAP gross margin were 87%, a slight decrease from the 2nd quarter due to higher contract manufacturing. Q3 GAAP and non GAAP R and D expense were both 15 percent of revenue or $508,000,000. Q3 GAAP SG and A was $498,000,000 and Q3 non GAAP SG and A was $495,000,000, both 14% of revenue.
We expect both R and D and SG and A expense to increase in the 4th quarter relative to the timing of clinical trial expense and market expansion investments as well as seasonality. GAAP amortization was 2.82 related to updates in our contingent consideration liability. GAAP other net income was 115,000,000 in the 3rd quarter versus a net expense of 44,000,000 in Q3 of last year. This includes a GAAP only gain of approximately $141,000,000 related to changes in the fair value of certain equity investments including shares of IONIS Pharmaceuticals as of September 30, 2018. Non GAAP other net expense was $26,000,000 in the 3rd quarter versus $44,000,000 in the third quarter of last year.
In Q3, our GAAP tax rate was approximately 20% and our non GAAP tax rate was approximately 21%. Our weighted average diluted share count for the 3rd quarter was approximately 202,000,000 shares. During the quarter, we did not repurchase any shares of our common stock. However, our board has authorized a new $3,500,000,000 share repurchase program. This now brings us to our diluted earnings per share.
In the third quarter, we booked GAAP earnings per share was $7.15, an increase of 24% versus last year, and non GAAP earnings per share $7,000,000,000 of net cash flows from operations in the third quarter. We ended the quarter with approximately $5,700,000,000 in cash and marketable securities, and $5,900,000,000 in debt. We believe we have and will continue to have ample capacity to execute meaningful future business development and M and A activity. As well as return capital to shareholders. We will continue to be disciplined in our approach and focused on value creation.
I'll now turn the call over to Michelle for his closing comments.
Thank you, Jeff. We closed the 3rd quarter with double digit revenue and earnings growth versus a year ago and exciting progress across our pipeline and last week, we launched a new biosimilar. Looking forward within the next 12 to 18 months, we expect further progress across our neuroscience pipeline, including esai's presentation of the BAN2401 data this week at FITAD and assessing next steps. Data readouts across Alzheimer's, including the final phase 3 data for aducanumab as well as MS PSP, ophthalmology and ALS and filing for regulatory approval in the U. S.
For BIIB 98 in MS. And using the updated neutral data as the most recent example, we continue to see compelling evidence across the neuroscience landscape that leads us to believe we are the beginning of a period of transformative breakthroughs in the treatment of neurological diseases. We believe we are uniquely positioned to on this potential breakthroughs and Biogen's goal is to be the long term leader in our science. To deliver on our aspiration, we remain focused on executing well on our strategy priorities to fortify our core business in MS and SMA and allocate capital to expand and progress our neuroscience pipeline while opportunistically returning capital to shareholders. Finally, I want to reiterate our commitment to maximizing returns or shareholders and bringing innovative therapies to patients over the long term.
These demands that we continue to allocate capital efficiently, effectively and appropriately As we have demonstrated in the past, we will always strive to have an optimal capital secure as well as aim for super returns from impact on patients' life. 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.
Your first question comes from the line of Umer Raffat with Evercore. Please go ahead.
Hi, good morning. Thank you for taking my questions. Michelle, I think we've all asked Biogen's R and D leaders on this in the past, and I'm curious to get your view on this, which is Do you think BAN2401's previously reported results at higher doses were entirely driven by a baseline imbalance on carrier status. And based on everything we've seen to date, is Biogen willing to pay for phase 3 on BAN or is there a way to opt out?
Thanks for the question, Umer. It's we have seen the data obviously, but we have 2 days to wait for the 25th in Barcelona. So we have to be patient and a size presentation. We give a slide on the next steps. Please understand.
Thank you.
Your next question comes from the line of Geoff Meacham with Barclays. Please go ahead.
Hey guys, good morning and thanks for the question. On aducanumab, looking at the 3Q slides versus prior periods, this is the first time you guys have noticed that the Phase III data for ENGAGE and Emeritus is final. Am I reading too much into that? I'm just thinking about the willingness to take an interim look and related on the EVOLVE study What was the driver for initiating the phase 2? Was it regulatory ongoing analysis or just of phase 3 or was it preplanned?
Thank you.
Hi, Jeff. It's Al Sandrock. Well, I wouldn't read too much into that, that statement about final analysis. We're not commenting on whether or not we're going to do an interim analysis. And hope you understand the main reason for that is that we want to maintain clinical trial integrity.
On the drivers for Evolve, it really wasn't, driven by regulatory requests. It was our desire to see whether or not MRI monitoring was necessary. So in this study, what we're looking, what we're doing is all symptomatic area is being addressed the way it is now in the current clinical trials. It's really how you deal with the asymptomatic area, which is what this study is looking at. And whether or not the MRI monitoring that's being done is actually necessary.
And so that's the main purpose.
Your next question comes from the line of Geoffrey Porges with Leerink. Please go ahead.
Thank you very much for taking my quick questions. Just a couple of data ones. Could you clarify the contribution of net price to your U. S. Marketed product performance?
And then secondly, could you give us some commentary on SPINRAZA treatment persistence by type 1, type 2 and type 3 patients so far. Thanks.
Yes, hi, Jeff, it's Jeff. So from a pricing perspective in the U. S. And MS, we had a slight benefit from a pricing perspective in the U. S, the benefit of our products within the quarter based on pricing increases earlier in the year.
And Jeff, this is Julian. Just commenting on the question on SPINRAZA treatment persistence across SMA types. In our experience, essentially, there's been a very durable and persistent treatment effect of SPINRAZA across all types.
Your next question comes from the line of Matthew Harrison with Morgan Stanley. Please go ahead.
For taking the questions. I guess I was hoping for a little bit more clarity on what was going on with the SMA gene therapy product? And maybe specifically if you could also address, do you think the preclinical observations are centered specifically on this program or do they impact your broader gene therapy pipeline? Thanks.
Hi, Matthew. I'll take that question. We're not really going to comment on ongoing FDA interactions. I would say, of course, those interactions are program specific. But we won't really discuss details about those interactions at this point.
Your next question comes from the line of Ying Huang with Bank of America Merrill Lynch. Please go ahead.
Good morning. Thanks for taking my question. To the extent you can comment, can you confirm whether you will interact with the FDA N2401 for a phase 3 strategy or even filing for that based on phase would be or not. If you cannot answer that, I would like to ask a question about the SMA, We've seen data from both Roche and Novartis on the oral programs. Given the setback of your gene therapy program, does that change your strategy about future business development in SMA trying to maintain our leadership here?
Thanks.
Hi, this is Al. I'll take first part, we're not commenting on regulatory interactions that we're basically in the middle of right now, so I can't answer your first question, sorry.
And I'll take the question on the Roche oral and SMA commitment. I mean, just to be completely clear, we remain highly committed to SMA, we follow other programs in experimental therapeutics and development. We are aware of the data that Roche and PTC have presented around their oral compound. We know that the field is very interested in the long I would say that our most recent nurture data that I mentioned really highlights the compelling efficacy profile of SPINRAZA And when we look across just the clinical experience to date, I would remind that while we're very interested in, I think it's roughly 21 type 1, 35 type 2, type 3 patients in the Roche PTC study. We've had nearly 6000 patients for close to up to 6 years in some instances of patients on SPINRAZA.
So we have the largest body of clinical evidence for any SMA therapy.
Your next question.
If I may, this is Michel. I just wanted to add that we are adding more momentum in the U. S. In penetrating the ideal population. And this was unsure at the beginning of the year, uncertain at the beginning of the year.
And ex U. S, we have staggering launches in different geographies. And if in some, we may see some of the effect we have seen in the U. S. Following the 1st year of dosing, there are plenty of countries that are being where we are launching.
We just filed in China, for example, We are unlocking patient population also in Latin America. We are doing extremely well in Japan and continue to do well in core Europe. So the momentum is good, but again, the biggest satisfaction is the implementation capability in the U. S. In the 65% of the market that's at the location.
Your next question comes from the line of Cory Kasimov with JPMorgan. Please go ahead.
Hey, good morning guys. Thanks for taking my question. I was wondering if you can comment on the 2019 pricing outlook for your MS franchise based on your formulary negotiations? Thanks.
Yes. Unfortunately, we will not be able to comment on price. We see the magnitude and the frequency of price being taken in the marketplace in the past, but we cannot comment on the future.
And your next question comes from the line of Michael Yee with Jefferies. Please go ahead.
Great. Thanks for the question. A question on biosimilars, you made a comment that, obviously, you're launching HUMIRA biosimilar. But that fourth quarter, I guess biosimilars would be stable. Can you just comment on a, your outlook on a Humira biosimilar versus type of business you're doing with the Enbrel business?
And then more importantly, where do you think this $500,000,000 business can go over the next few years given you've obviously made some bullish comments on that? Thanks.
So, Michael, we're pretty excited about the launch The team has already hit the ground. I think they're very well prepared and we'll see some contribution. We believe in the fourth quarter, A lot of those contracts, big contracts in Europe are tenders that take a little bit of a while to kind of ramp up. That's why you won't see as much of an impact in the fourth quarter. There's also some pricing pressure across, some of the other two lines that we're there on.
So that kind of negates the benefit we'll get expect to get from an Meraldi perspective, but we think this business has the opportunity to potentially double, over the next couple of years, based on the Meraldi. And we'd like we said before based on our relationship with BioFS to add more compounds. And so, we believe that this is a good growth opportunity for us we're quite excited about the future.
So this is not the first anti TNF that is being launched in Europe. This is a third one. And, I would say the purchase pattern and the journey is well set for those countries in terms of 2 big categories. The one that perform tenders and the one for which decision is left more at the physician level. So we anticipate that the adalimumab biosimilar will penetrate least as strong as the previous one, even stronger.
And I would like to remind you that we are the only company having the 3 anti TNFs in the marketplace. So the team is ready, motivated, supply is ready, and while we speak, the prescriptions are going on.
Your next question comes from the line of Phil Nadeau with Cowen and Company. Please go ahead.
Good morning. Thanks for taking my question. I wanted to ask another one on SPINRAZA competition. It sounds like your expectations for growth for SPINRAZA, especially in the U. S.
Are largely from the adult population, does seem like Roche and PTC with an oral compound could have a key differentiating feature for that population. So how do you see competition coming in the adult population and how could you differentiate SPINRAZA for those patients? Thanks.
So Phil, maybe I'll start and others may have a comment here too. I mean, in essence, we are very confident see with the clinical data on SPINRAZA, we're encouraged by the ongoing studies in teens and adults that we see in the access, including in complex spine patients. Spin wrong. So we're very aware of the other competitive programs out there. It's early days in a lot of those.
And like I mentioned, we know the field is very interested in the long term safety and tolerability of the orals. We know that there are questions around the dose selection that will ultimately be used there. And to date it's a relatively small number of patients, but we are certainly staying
aware of
So if we were able somehow together with the clinicians to deliver 30,000 dosing of SPINRAZA during the past months is because in real world, there is an efficacy perception at the patient level. So, it's an efficacy play for those patients who are desperate to improve functionally and the convenience comes after. This is what is being brought back by the customers. So with 6000 patients, being those and more than 300 patients in clinical trial, we have a body of evidence that is difficult to match for the time being.
Your next question comes from the line of Carter Gould with UBS.
Good morning guys. Thanks for taking the question. I guess for, Jeff or Michelle on, just on, the ASR versus committing to more BD obviously been pretty active so far this year on the BD front, but maybe just kind of how you see that balance and I guess looking out the next sort of 12 to 18 months, how you see that maybe evolving? Thank you.
Yes, so thanks for the question. So I think the nice position where we're in is given our cash flows, we generated $1,700,000,000 of cash flow for the quarter. Again, strong cash flow and given our net debt position. We have the luxury of being able to do both, both to invest in the business from a pipeline perspective and return capital to shareholders. So we've now done 8 acquisitions, and licensing type deals slash acquisitions since Michelle's been, CEOs.
We're very encouraged by that and we expect to do more. A lot of them have been done kind of in the in the early to mid stage, we'd love to get something later stage done, but we also have ample cash capacity to return capital to shareholders. We bought back $10,000,000,000 of stock over the last couple of years. And I would just remind investors that we have a new $3,500,000,000 share repurchase program that the board has recently authorized. So we have ample capacity to do both.
Certainly, it would be a preference to get more done in the pipeline and get more done that's later stage. So certainly that would be kind of the focus or the preference, but we of the capacity to do both?
So if you look at the momentum that Biogen is able to deliver year to date, if I'm not mistaken, is 12% on the top line with the leverage P and L. This was not anticipated 2 years ago. Because of OCREVUS launch because of limited potential of SPINRAZA because of neglected biosimilars and the rest. And here we are. So we are not in the on a burning platform and the level of rigor and alignment to the strategy to the scientific validity to the IP and to financial criteria remain very rigorous within the organization.
And even more importantly, we have some very important readouts in the coming months. So in the meantime, we deliver, we tightened the belt and reevaluating opportunities, but in a very paced manner.
Your next question comes from the line of Salim Syed with Mizuho. Please go ahead.
Yes, hi guys. Thanks for taking the question. This one's for probably Mike or Al. Just on the XLR gene therapy program, can you confirm that we're still getting top line data in fourth quarter of this year? And what are you looking for in terms of deeming the trial a success?
Thank you.
Yes, so thanks for the question on this. So Right now, we on the XLS program, we recall that this is a collaborative program with AGTC the kind of phase 1two trial is ongoing. This is an adult subject to XLRS. And at the moment, we're anticipating that we could get a data readout, projected in the 1st part of next year or so. But of course, these are always dependent on timing and enrollment of the right subjects.
We're also very interested to know differences, for example, in the adult versus pediatric population in this disease, there's some heterogeneity as you may know in kind of the path of pathology and XLS because it has to do with exact locations in the retina, the specific visual endpoints you need and so forth. But to date, the program is on track.
Your next question comes from the line of Robin Karnauskas with Citi. Please go ahead.
Hi guys. Thanks for taking the question. So from your presentation, it's there's a lot on your pipeline that it feels like you're focused on. And, just trying to understand a little bit as we see all these reads that are going to come out over the next 12 to 18 months, excluding your Alzheimer's programs, Which do you think have the most, the greatest ability to have a read to phase 3? In other words, like give you the we'll give you the most confidence that there's a real proof of concept or proof of potential success for those indications.
As historically, we know, if something works at Biogen with your leverage, the stock is ability to go up a lot. So help us understand which of those you think are the least risky and how the greatest read to the next stage of development?
Okay. So this is Mike. I'll try to take some of that. Thank you, by the way, for the question. I mean, as Michel mentioned, and so we do have a number of upcoming data readouts at different stages across the pipeline that have, I'd say, different ramifications.
A few things that we noted there is that we will start getting data on our BIIB067 SOD1 ALS program. Either towards the end of the year or early next year. This we think will be important, primarily as a second leasing ASO program, in this case, in an adult indication with a different mechanism of action in the RNA's age mediated knockdown of a pathological gene target So we're very interested to see the biomarker and potential clinical efficacy data from that. That likewise has the potential to to influence our thinking on other genetic targeted ASO programs like BIIB078, like I mentioned for C9ORC 72 positive ALS. As well as our TAO ASO program, which is currently in a Phase 1 study in Alzheimer's disease.
But I'd say there are more, we are we've been very successful in advancing our BIIB09 II program in progressive supranuclear palsy. This is obviously a rare severe orphan disease. So I think could give us an accelerator opportunity. And beyond that, we're We've initiated our Phase III study in BIIB093, so that will be ongoing. And although it's a really first of its of its kind, we're very encouraged by the responsive sites.
And of course, we announced that earlier this year that we completed enrollment and engaged an emergency aducanumab, which is an 18 month dosing period study. That amongst others, I think, constitute an array of upcoming data readouts that have the potential to, to create significant excitement.
Your next question comes from the line of Ronnie Gal with Bernstein.
Good morning, everybody, and thank you for fitting me in. Two questions for Mike on the pipeline. Mike, first, the BIM-one hundred and four AMPA, regulator, AMPA has been a particularly difficult target to drug. Can you discuss a little bit how you can if you can avoid the toxicities that have been seen with us target before. And second, about O93, the glyburide program, essentially, is this one of those programs has the potential for reading out early?
Is there an interim analysis here? You kind of think about stroke, it's something you can accumulate there pretty quickly, how you think about a potential program to actually read out ahead of time.
Okay. Thanks, Ronnie, for the questions. I'll try to take this briefly. On BIV-one hundred and four, what we were encouraged by there was really a quite differentiated and tight pharmacokinetic profile and safety profile that have observed both pre clinically and clinically, it was really quite different from previous earlier generation AMPA Pans. So to date, the clinical and preclinical data that have been seen have supported a favorable tolerability profile as well as showing indications of efficacy in a few different clinical studies and have different designs in the domain of working memory and cognition.
So we think there are they're differentiating features that have to do with some of the very specific pharmacology of this compound versus others previously in the class. That we think is differentiated. On BIIB093, we won't talk about an interim analysis on that. But I would say is that we have had a very strong response on site engagement, site activation and investigator interest, because obviously there has been really no alternatives for patients having a large hemisphere again for
Your next question comes from the line of Terence Flynn with Goldman Sachs. Please go ahead.
Hi, thanks for taking the questions. Maybe just, first on the financials, I was wondering if you can help us think about your tax rate heading into 'nineteen. You guys, looks like you've continued to bring that lower throughout the course of the year? And then any guidance on the operating margins for the biosimilar franchise that you can offer at this point? And then just one on the pipeline for 8700, you mentioned some new endpoints in that study.
Can you just review what change there? Thanks. So with regard to the tax rate, we're currently running at a low 20% tax rate, as I mentioned in the script, we did mention when tax reform first got implemented, that we expected the tax rate to come down again in 2019. As a result of some accounting factors that are more unique to kind of how our tax structure works around the world. We still expect that to be the case.
And we'll be able to provide you a more specific, expectation on that when we release guidance in January for 2019. In terms of operating expenses, as I mentioned, we expect the fourth quarter to tick up a little bit as we continue to invest in the pipeline and drive some of the growth that we're seeing from a commercial perspective in SMA. We're still in the middle of kind of going through our planning process for next year. What I can share with you is based on the strength of our lean and simple cost savings initiative, we expect to take money out of kind of the G and A area and invest that back into the pipeline and continue to grow our spend in our projects with regard to R&D. So we're very committed to that.
I think to increase the innovation and neurology here for the company. So
I I think there was a question on $8700, but I'm going to interpret that as BIIB098. If that's not asking, but I'll just say that on BIIB098, We have used data from the Part A of the study to inform Part B, where we've expanded the patient number in the head to head study against against TECFIDERA, where again, we anticipate that we'll be able to file on this data this year looking at approval, potentially in the first half of next year or mid next year.
And your final question comes from the line of Chris Raymond with Piper Jaffray. Please go ahead.
Thanks for squeezing me in. Yes, so just another question on the strategy here. I do think this launch could be kind of unique. So you're filing under a 505(2) pathway, but you will have a head to head versus Federa on tolerability that you which you've talked about. Some of our work indicates that that's kind of one of the bigger reasons for discontinuation of TECFIDERa tolerability issue.
So if BIIB098 sort of repeats the clinical data we've seen so far, that should address essentially a big issue for Tecadero. So how do you approach the marketing and positioning of this drug And how should we think about these 2 drugs coexisting over time? And then also just on that point, I think in your slides, you guys talk about 2020 approval, but I think I just heard you guys mention a maybe second half twenty nineteen approval. Can you sort of talk about that timing?
Thanks. Thanks for the great question. And first, I would like to say that we are pleased with the momentum behind tech I think this is important. So tech will remain always front and center. We are doing well.
We grow the volume, even if we price, we face some pricing pressure in part of the world like in Europe, and we have increasing competition. So bid 98 will offer the opportunity eventually to have an upgrade in terms of safety profile and GI safety. And this will be the eventually the low hanging fruit, but we aim to move further. And the team is working towards the longer term life cycle management opportunities that this product offers beyond the fumarate. So this is what we are working on, but we are very excited about this opportunity and to expand our leading share of worlds but beyond the Figara market.
So looking forward to this filing and potentially launch towards the end of 2019, or early 2020. So at this stage, I would like to close the call by saying a very exciting times that Biogen, we are looking forward to to the data readouts. And thank you all for attending our call today. Have a good day.
And thank you for joining today's call. Before we conclude, I would like to remind everyone that we plan to host 3 webcasts from CCAD later this week on Thursday, October 25th, at 7:30 am Eastern Time, We will webcast a keynote presentation from Samantha Bud Haberlin, Vice President, Alfheimer's disease, dementia and movement disorders later stage clinical development, titled what have we learned from aducanumab? Later that day at 4:15 pm Eastern time, we will host an investor Q and A webcast to discuss Alzheimer's portfolio with Doctor. Al Sandrock, our Chief Medical Officer and Samantha Bodhabeling and on Friday, October 26 at 9:15 a. M.
Eastern Time, We will webcast the oral presentation titled aducanumab titration dosing regimen, 36 month analysis from PRIME of Phase 1b study in patients with early Alzheimer's disease. The links to those webcast can be found on the Investors section of Biogen's website at www.biogen.com. Thank you, and we look forward to speaking with you in the future.
Thank you to everyone for attending today. This will conclude today's call and you may now disconnect.