After Completion Of Spinoff From Biogen(BIIB), Bioverativ(BIVV) Aims To Stop The Bleeding

Bioverativ logoOn February 1, Biogen(BIIB) completed the spinoff of its Hemophilia business, Bioverativ(BIVV).  Biogen shareholders woke up on February 2 to find one share of Bioverativ in their portfolio for every two shares of Biogen that they had owned. Biogen has had a tumultuous year, with the departure of its longtime CEO George Scangos in January amidst stalling sales.

Xconomy’s Ben Fidler(@benthefidler) wrote a great piece on the spinoff, the history and the prospects for the Biogen and Bioverativ.

Biogen, one of the largest biotechnology companies in the world, was at a crossroads in 2016. An experimental drug for the memory-robbing scourge, Alzheimer’s disease, had shown signs of promise. That meant long, expensive, and risky Phase 3 trials lay ahead for Biogen to see if the early signals were more than a mirage.

So Biogen (NASDAQ: BIIB) went for it. In May, it decided to focus exclusively on tough neurological diseases like Alzheimer’s, Parkinson’s, and ALS—fields littered with expensive drug-development failures—and bundle up a stable, growing hemophilia business and spin it into a new company. That company, named Bioverativ (NASDAQ: BIVV), has officially launched this morning and will begin trading on the Nasdaq tomorrow. (Biogen shareholders get one Bioverativ share for every two Biogen shares they own; Biogen will not own any of Bioverativ’s stock going forward.)

Large companies spin off businesses for a number of reasons, but invariably it comes down to the belief that the two separated parts will be worth more than the original whole. To prove that, Biogen has to turn around the slowing revenue growth for its core multiple sclerosis franchise, overcome reimbursement challenges to meet the lofty financial projections for its recently approved spinal muscular atrophy drug nusinersen (Spinraza), and hit on the big bet it’s made on the Alzheimer’s drug, aducanumab (data are expected in 2019). For its part, Bioverativ has to prove it can build a sustainable business around a few FDA approved hemophilia drugs, despite all the competition quickly advancing through clinical testing.

“The test,” says Bioverativ CEO John Cox, “is going to be 2 or 3 years from now when you look back and [ask]: Did both of these companies do better independently?”

Bioverativ heralded its own arrival in a press release.

Today, Bioverativ Inc.  launches as an independent, global biotechnology company focused on the discovery, development, and commercialization of innovative therapies for hemophilia and other rare blood disorders. The company brings a deep understanding of hemophilia and a commitment to improving the care of people with hemophilia around the world. Its extended half-life therapies, ELOCTATE® [Antihemophilic Factor (Recombinant), Fc Fusion Protein] and ALPROLIX® [Coagulation Factor IX (Recombinant), Fc Fusion Protein] for the treatment of hemophilia A and B, respectively, represented the first major advances in treatment in nearly 20 years when launched, and generated $888M in total revenues in 2016.

Bioverativ launches with a novel pipeline of programs, an experienced management team and world-class expertise in research, development, technical operations, and commercial, as well as $325 million in cash. Beginning tomorrow, February 2, 2017, the company will trade on the NASDAQ Global Select Market under the ticker symbol “BIVV.” When-issued trading under the symbol “BIVVV” continues until market close today.

“Bioverativ has a strong legacy of commitment to the hemophilia community and, as a standalone company, we will bring an even greater focus on working together to create meaningful progress,” said John Cox, Chief Executive Officer of Bioverativ. “We understand the significant unmet needs that remain for people with hemophilia and are applying our science in the areas where we believe we can make the most impact.”

“We have a vision to build a great rare disease company that is focused on blood disorders and has the potential to create significant value for shareholders,” Cox added. “We are fortunate to launch in a strong financial position, with two innovative products for hemophilia that are continuing to show strong growth, significant capital to fund investment in future innovation, and a foundation of truly remarkable science on which we hope to develop the next generation of therapies for patients.”

“Bioverativ is positioned to take full advantage of its opportunity as a standalone company. The board and management are committed to focusing on the twin drivers of value creation – operational excellence and the efficient allocation of capital – with the objective of maximizing value for our shareholders,” said Brian Posner, Chairman of the Board of Bioverativ.

Advancing a Leading Portfolio of Hemophilia Therapies
ELOCTATE and ALPROLIX both have more than two years of real-world experience and are the only hemophilia therapies developed using Fc fusion technology. Bioverativ currently markets ELOCTATE and ALPROLIX in the United States, Japan and Canada, and plans to expand into additional geographies. The therapies are also commercialized in the European Union and other countries by Swedish Orphan Biovitrum AB (publ)(Sobi) under a collaboration agreement.

Researching Areas of Serious Unmet Patient Needs
Bioverativ’s scientists led the discovery and development of ELOCTATE and ALPROLIX, and continue to explore the underlying science and potential benefits of Fc fusion technology in areas of significant need in hemophilia, including immune tolerance induction (ITI) in patients who develop inhibitors, long-term joint health and women with bleeding disorders.

Bioverativ’s innovative pipeline is also focused on areas that have the potential to make an impact for patients. It includes novel programs in hemophilia A and B, sickle cell disease and beta thalassemia, and the company intends to rapidly progress its pipeline programs into the clinic.

  • BIVV 001 is an investigational recombinant factor protein designed for once weekly or less frequent prophylactic dosing for hemophilia A, and it is expected to enter the clinic in the second half of 2017.
  • Currently in preclinical testing, BIVV 002 is designed to enable subcutaneous administration of factor IX for hemophilia B.
  • Bioverativ also has a worldwide collaboration with Sangamo Therapeutics on its preclinical zinc finger nuclease-mediated genome editing programs for beta thalassemia and sickle cell disease.

Creating Progress for Patients, Together
Bioverativ will carry forward a commitment to innovative global programs that aim to improve access to treatment, advance disease understanding and create true partnership with the community. This includes an ongoing donation, together with Sobi, of up to 1 billion international units of clotting factor over 10 years for humanitarian aid programs in the developing world. It also includes continuing as a founding member of My Life, Our Future, a groundbreaking program that makes free genetic testing available to people with hemophilia A and B, as well as potential and confirmed carriers of the disorder in the United States.

With $325 million in cash and significant positive cash flow, the company is well positioned to develop or acquire additional products. Bioverativ continues to establish itself is a leader in the hemophilia community. In addition to presenting nine posters with its partner Sobi at the recent 10th Annual Congress of the European Association for Haemophilia and Allied Disorders, the company plans to focus on patient relationships.

Biogen has, I think, a terrific corporate brand that is about putting the patient first, and it’s about innovation, and we’ll carry that forward absolutely,” Bioverativ CEO John Cox said in an interview at January’s J.P. Morgan Healthcare Conference.

While patient-centricity is a quality drugmakers across the industry are talking up these days, hemophilia companies take it to a whole new level. The cost of treating the disease, its tiny patient population, and the fierce competition among drugmakers together prompt pharmas to build relationships with patients at a young age. In some cases, companies offer grants, gifts, services, scholarships and more to firm up the connection, practices that have drawn some scrutiny.

Bioverativ EVP and chief global therapeutic operations officer Rogério Vivaldi, M.D., sees his company taking those patient relationships up a notch by putting them at the center of its commercial model, setting up “specific functions that touch each group of stakeholders”—and, as rivals have also done, enlisting hemophilia patients and caregivers themselves to help build bridges.

‘Patient-centric’ is quite the buzzword in pharma these days, with many companies claiming the title, but Vivaldi says his company will exemplify it. “I say you don’t need only to say, you have to feel, to breathe … Everything we do, we have to put patients first.”

As we mentioned before, we believe that Bioverativ is fairly valued. There is ample room for this company to create value for shareholders if it can continue to execute on its mission.

Disclosure: The author holds no shares of any stock mentioned