Biogen Earnings Strong, But Celgene Just So-So

Investor's Business Daily

Thursday brought a bonanza of earnings reports from leading biotechs, whose sales mostly met expectations while the bottom lines told different stories.

Biogen Idec (BIIB) shares rose 5% to a new closing high of 216 after the company beat analysts' estimates and raised its 2013 targets.

Celgene (CELG) dipped 33 cents to 117.95 after reporting a more mixed quarter. United Therapeutics (UTHR) plunged early but recovered somewhat, falling 2.5% to 61.67 as investors sorted out its somewhat confusing report.

Former IBD 50 stock Alexion Pharmaceuticals (ALXN) rebounded nearly 11% after it beat estimates on the top and bottom lines.

Biogen Advances, DefendsFor Biogen, profit minus one-time items jumped 41% over a year earlier to $1.97 a share, topping Wall Street's views by 36 cents. Sales rose 10% to $1.42 billion, meeting consensus. The company updated its full-year EPS guidance of $7.80 to $7.90 vs. the consensus of $7.79. It said revenue should rise 16% to 18%, on the high side of expectations.

The results were complicated because even the ex items number included a one-time tax benefit that added 16 cents to EPS. In an email to clients, analyst Mark Schoenebaum of ISI Group wrote that many analysts hadn't updated their estimates to account for Biogen's buyout of Elan's (ELN) share of the multiple-sclerosis drug Tysabri on Feb. 6.

Biogen CEO George Scangos also defended newly launched MS drug Tecfidera against an article in Thursday's New England Journal of Medicine tying its active ingredient with four cases of a rare brain disease.

"All four cases were seen by the FDA, European regulatory authorities and all regulatory authorities months in advance of approval," he said on the conference call with analysts. "And I think the Tecfidera label speaks for itself.

Biogen's stock spiked to a new high Monday after data on the first week of its launch turned out to be very positive. On the call, Tony Kingsley, the company's global operations chief, said he expects Tecfidera to become the leader in the emerging oral MS drug category.

For Celgene, revenue met expectations for a 15% gain to $1.47 billion. Profit rose 27% to $1.37 a share, beating by 2 cents, but this was mostly due to analysts overestimating the tax rate, according to Schoenebaum.

The company added a nickel to its full-year EPS guidance to $5.55-$5.65, yet still below consensus of $5.70. It affirmed its previous sales guidance of $6 billion, up 11% from last year.

Sales of Celgene's top drug, multiple-myeloma treatment Revlimid, rose 16% to $1 billion, but came in about $10 million short of consensus. On the upside, the launch was faster than expected for Pomalyst, approved in early February for the same disease. Its sales totaled $29 million, vs. just $8 million consensus.

Biotech BookkeepingAt United Therapeutics, revenue rose 20% to $245.1 million, about $4 million above consensus. Its 87% gross profit margin, though, was a bit light due to unexpectedly high costs. Nonetheless, its accounting methods make comparing earnings to year-ago and consensus numbers unusually complicated.

Earnings per share missed estimates mostly because of the stock-option expense accounting, RBC Capital Markets analyst Michael Yee told IBD via email. The options expense rose, he pointed out, because the stock did. "This swings EPS around and also (is) why consensus EPS ranges widely," he said.

United Therapeutics shares closed near their session highs Thursday after hitting a record 64 intraday Wednesday.

Alexion revenue, which all hails from its rare-disease drug Soliris, rose 38% to $338.9 million, edging past views. Profit jumped 44% to 65 cents a share, beating consensus by a nickel.

Alexion slightly raised guidance. It sees sales of $1.51 billion to $1.52 billion vs. $1.13 billion in 2012. It pegs EPS at $2.87 to $2.97 vs. $2.13 last year. Both were in line with consensus.

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