Biogen Q3 EPS Beat Led By Its MS Drug
Biogen Idec's (BIIB) stock hit a new high Monday after it beat analysts' Q3 estimates on the strength of its new multiple sclerosis drug. Still, a new note of uncertainty with the launch of its hemophilia drug kept analysts cautious.
Biogen said quarterly sales rose 32% over the year-earlier quarter to $1.83 billion, beating analysts' consensus by almost $40 million. Per-share profit minus one-time items jumped 23% to $2.35.
The company raised its 2013 guidance, saying full-year revenue should rise 23% to 25%, with EPS of $8.65 to $8.85 vs. $6.53 last year. But that implied Q4 EPS below the consensus forecast.
The earnings beat came almost entirely on the strength of Tecfidera, the oral MS treatment that Biogen launched six months ago. Sales totaled $286 million in the quarter, some $80 million above the consensus number and also past the "whisper number," according to ISI Group analyst Mark Schoenebaum. "This is really, truly incredible," he wrote in an email to clients early Monday.
Those sales more than made up for a shortfall in Tysabri, Biogen's older MS blockbuster, whose $401 million in revenue was $29 million below consensus. This was not a surprise, however, as Elan (ELN) reported its royalty revenue from the product in its own Q3 report last week.
On a conference call with analysts to discuss results, Biogen Executive Vice President Tony Kingsley said Tysabri's growth in Europe is getting hit by competition from oral drugs — presumably meaning Novartis' (NVS) Gilenya and Sanofi's (SNY) Aubagio, since Tecfidera has not yet launched there. He also said that nearly half of the shortfall came from deferred revenue at Biogen's Italian affiliate. For the last two years, the company has been entangled in a dispute with Italian regulators over reimbursement for the drug.
"For Tysabri, we hope to record a revenue benefit of approximately $95 million by the end of the year related to the pending settlement with the Italian National Medicines Agency, but this may not happen," Biogen CFO Paul Clancy said on the call.
Biogen CEO George Scangos updated two important regulatory matters. He said the company learned in discussions with the FDA last week that there might be a delay in the launch of Eloctate, the long-acting treatment for hemophilia A that had been on track to launch next year. He said the issue did not have to do with the safety or efficacy of the drug, but with the manufacturing process, and thus doesn't affect the odds of approval. Because the development is so new, he said he could not give further details.
The news did seem to boost sentiment toward Baxter International (BAX), the current market leader in hemophilia. Its stock was up more than 2% in midday trading.
Back on the Tecfidera front, Scangos also pointed to a document released Friday saying the advisory committee of the European Medicines Agency will make a decision on Tecfidera's market exclusivity when it meets in November. This issue has delayed Tecfidera's approval in Europe, because Biogen has sought to have the drug recognized under the Regulatory Data Protection law that provides market exclusivity to a "new active substance" for 10 years. That would give Tecfidera greater protection than its patent, which is theoretically open to challenge in 2019.
The issue has been just how new Tecfidera is, since somewhat similar compounds already exist. In her note Monday reiterating her buy rating on Biogen's stock, Deutsche Bank analyst Robyn Karnauskas wrote that the EMA's decision is the key variable in her stock valuation. With the protection, she values it at 250; without the protection the drug might not even launch there, in which case her valuation could drop to 225.
