Biogen(BIIB) Spinoff Bioverativ(BIVV) Begins Trading On A When Issued Basis

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Biogen(BIIB) enters the final days before its spinoff of Bioverativ(BIVV), its global hemophilia business, as the new company begins when issued trading under the ticker BIVV. After the close of business on February 1, Biogen shareholders as of January 17 will receive one share of Bioverativ for every two shares they own.  The distribution is expected to be tax free to shareholders.

Bioverativ’s most recent information statement can be found here.

Bioverativ is a global biotechnology company focused on the discovery, research, development and commercialization of innovative therapies for the treatment of hemophilia and other blood disorders.

        We market two products, ELOCTATE [Antihemophilic Factor (Recombinant), Fc Fusion Protein] and ALPROLIX [Coagulation Factor IX (Recombinant), Fc Fusion Protein], extended half-life clotting-factor therapies for the treatment of hemophilia A and hemophilia B, respectively. ELOCTATE and ALPROLIX use a process known as Fc fusion to link recombinant factor VIII and factor IX, respectively, to a protein fragment in the body known as Fc. The fusion of the factor with the Fc protein fragment uses a naturally occurring pathway and is designed to extend the half-life of the factor, thereby making the product last longer in a person’s blood than traditional factor therapies.

        We collaborate with Swedish Orphan Biovitrum AB (publ) (Sobi) to develop and commercialize ELOCTATE and ALPROLIX globally. We have rights to commercialize ELOCTATE and ALPROLIX in the United States, Japan, Canada, Australia and all other markets excluding Sobi’s commercialization territory. Sobi’s commercialization territory includes Europe, Russia and certain countries in Northern Africa and the Middle East. See “Business—Our Development and Commercialization Arrangements with Sobi.” ELOCTATE and ALPROLIX were approved in the United States and Japan in 2014, and in the European Union in 2015 and 2016, respectively.

        We have multiple programs intended to further support our marketed products and an innovative product pipeline devoted to the creation and delivery of new therapies:

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Research activities relating to our marketed products include ongoing and planned post-marketing studies exploring the potential of Fc fusion technology on long-term joint health, immunogenicity and immune tolerance induction in hemophilia patients who develop inhibitors.

 

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Research activities relating to new products include discovery and preclinical programs studying longer-acting extended half-life hemophilia product candidates, non-factor products to treat hemophilia (such as bi-specific antibody technology) and gene therapies for both hemophilia A and B. We also have ongoing research programs relating to sickle cell disease and beta-thalassemia. See “Business—Pipeline and Research and Development Activities.”

        We generate revenue through sales of our products, royalties earned on sales of ELOCTATE and ALPROLIX by Sobi in its commercialization territory and the supply of ELOCTATE and ALPROLIX to Sobi. For the nine month period ended September 30, 2016, we generated revenue of approximately $631.2 million primarily from our sales of ELOCTATE and ALPROLIX in the United States, Japan and Canada, and for the year ended December 31, 2015, we generated revenue of approximately $560.3 million primarily from our sales of ELOCTATE and ALPROLIX in the United States and Japan.

With $325 million in cash and very little debt, the new company will begin with a strong balance sheet. In addition, the two marketed drugs, although under fierce competition, continue with healthy gross margins. Through the first nine months of 2016, the company had nearly $150 million in profit. At the same time, though the company’s core drugs are under increasing competition, there is a robust pipeline which may lead to additional upside.

BIVV 001(rFVIIIFc-VWF-XTEN).    A preclinical program of the combination of our proprietary recombinant factor VIII-VWF fusion protein with proprietary XTEN technology licensed from Amunix. The product candidate is being developed with the objective of achieving once weekly or less frequent dosing by intravenous administration in patients with hemophilia A.

        BIVV 002 (rFIXFc-XTEN).    A preclinical program for a next generation recombinant factor IX replacement product using XTEN technology exploring the use of subcutaneous dosing for patients with hemophilia B with the objective of achieving once weekly or less frequent dosing, which we believe would simplify the administration process for patients with hemophilia B.

        Gene Therapy Programs.    We are collaborating with Fondazione Telethon and Ospedale San Raffaele S.r.l. to develop gene therapies for hemophilia A and B. This collaboration centers on advanced lentiviral gene transfer technology of the San Raffaele Telethon Institute for Gene Therapy.

        Bi-Specific Antibody Program.    A preclinical program to develop a non-factor bi-specific antibody for the treatment of patients with hemophilia A with inhibitors and the general hemophilia A population.

        Other Blood Disorders.    We are currently pursuing opportunities in sickle cell disease, including carrying out small molecule screens against targets that we believe have potential to intervene in sickle cell disease as well as performing clinical research in an effort to develop better measures of efficacy. In addition, in connection with the separation we will succeed to Biogen’s rights and obligations under an exclusive, worldwide research, development and commercialization collaboration and license agreement with Sangamo under which the companies will develop and commercialize product candidates using genome editing technologies for the treatment of two inherited blood disorders, sickle cell disease and beta-thalassemia.

With a strong balance sheet, strong profitability and a strong pipeline, Bioverativ begins life in a strong position.  At an initial valuation of nearly $5 billion, the company looks fairly valued, given its profitability and its pipeline.

Disclosure: The author has no position in any stock mentioned