Biogen posts 20-percent increase in first-quarter profit, as Spinraza sales jump

Headline results for the first quarter:

Revenue

$3.5 billion (versus forecasts of $3.4 billion)

+11%

Profit

$1.4 billion

+20%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Biogen delivered strong financial results in the first quarter driven by the solid operational performance of our [multiple sclerosis], [spinal muscular atrophy] and biosimilars franchises," remarked CEO Michel Vounatsos.

However, the chief executive said "we are deeply disappointed with the discontinuation of aducanumab for Alzheimer's disease," although the company "[continues] to believe we can create value for patients and investors by capitalising on opportunities in neuroscience."

Biogen said it expects a reduction of about $125 million in operating expenses during the year related to the discontinuation of aducanumab, with net savings of about $80 million. "Plan A was always to prepare Biogen for growth even without aducanumab," Vounatsos said, adding "I believe Biogen is set to rebound and I fundamentally believe we will be back."

Other results:

  • Multiple sclerosis product sales: $2 billion, down 2 percent
    • Tecfidera: $999 million, up 1 percent, narrowly missing consensus estimates
    • Tysabri: $460 million, down from $462 million in the prior year
    • Avonex: $397 million, down 12 percent
    • Plegridy: $104 million, up 4 percent
  • Spinraza: $518 million, up 42 percent, including US revenue of $223 million and ex-US sales of $295 million, while analysts expected sales totalling $486.4 million in the quarter
  • Rituxan/Gazyva: $405 million, up 11 percent
  • Ocrevus royalties: $112 million, up 46 percent
  • Biosimilars: $175 million, up 37 percent, fuelled by the launch of Imraldi

Looking ahead:

Analysts anticipate Biogen will garner full-year earnings of $28.88 per share on about $13.7 billion in revenue for Biogen. The drugmaker had previously forecast earnings of $28 per share to $29 per share on $13.6 billion and $13.8 billion in revenue.

What analysts said:

In regards to Biogen's anticipated savings tied to the aducanumab discontinuation, SVB Leerink analyst Geoffrey Porges said "management appears mostly inclined to deploy these savings and the rest of their excess capital for share repurchases rather than for transformative acquisitions."

He also noted that competition is looming for the spinal muscular atrophy therapy Spinraza in the form of Novartis' gene therapy Zolgensma, and a drug from Roche with PTC Therapeutics. "The company's challenges for Spinraza may be delayed somewhat by the recent issues (two fatalities) with Zolgensma, but the threat posed by Roche's risdiplam still seems material, beginning late this year or in the first part of 2020," Porges said.

Meanwhile, analyst Brian Abrahams of RBC Capital Markets said Biogen, which has two lupus treatments in Phase II testing, offered some hints that it could begin to focus more on its lupus drugs. The company "highlighted several lupus assets," he said, adding this "could hint at interest in diversifying into inflammation. We believe this would be a reasonable adjacency that would resonate well with investors, given its improved risk profile versus neurological [diseases]."

Still, Mizuho Securities analyst Salim Syed suggested Biogen has not provided specific plans for growth, saying "I don't think they've given investors a concrete path here that they're moving the company forward."

Pipeline update:

Biogen highlighted 10 mid- and late-stage programmes for which meaningful data are expected by the end of 2020, including head-to-head data for the experimental multiple sclerosis treatment BIIB098 by mid-2019. Last month, Biogen and partner Eisai decided to advance the experimental Alzheimer's disease therapy BAN2401 into late-stage testing despite the failure of aducanumab.

Biogen also inked a deal in March to purchase Nightstar Therapeutics for about $800 million in cash, gaining the latter's pipeline of gene therapy candidates in ophthalmology.

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