Capital to shareholders
In 3Q15, Biogen made significant progress in returning capital to shareholders through share repurchase activity as well as non-organic growth initiatives.
Share repurchase activity
On May 7, 2015, Biogen announced that it has authorized a share repurchase program worth $5 billion. As share prices lowered in July 2015, the company expedited the program and purchased about 9.7 million shares for $3 billion by September 30, 2015. Since 3Q15, the company has purchased an additional 3.2 million shares worth $900 million. The company expects to complete the $5 billion share repurchase program by the end of 2015.
To fund this share repurchase program, Biogen issued senior unsecured notes worth $6 billion in September, including notes with maturities of five, seven, ten, and 30 years.
In addition to returning value to shareholders through repurchase activity, similar to other biotechnology peers such as AMGen (AMGN), Celgene Corporation (CELG), and Gilead Sciences (GILD), Biogen has adopted the strategy of tuck-in acquisitions and collaborations to create shareholder value. The company’s inorganic growth strategy has enabled the company to acquire assets such as Tecfidera, Eloctate, and Alprolix, as well as investigational medicines such as Aducanumab, ISIS-SMNRx, and Raxatrigine. Despite returning about $3.9 billion to shareholders through the share repurchase program, the company maintains financial flexibility for business development and large scale acquisitions. The company is currently seeking late-stage commercial assets, which are fairly priced and will add both revenue and strategic value to Biogen.
Instead of directly investing in Biogen (BIIB) and being exposed to any company-specific risks, you can invest in the company through the iShares Nasdaq Biotechnology ETF (IBB). Biogen accounts for 7.8% of IBB’s total holdings.