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Biogen (BIIB) Q3 Earnings Top, Tecfidera Generics Hurt Sales

Zacks Equity Research
·6 min read

Biogen BIIB reported third-quarter 2020 earnings per share of $8.84, which comprehensively beat the Zacks Consensus Estimate of $8.06. Earnings declined 4% year over year due to lower revenues.

Sales of the biotech giant came in at $3.38 billion, down 6% from the year-ago quarter hurt by lower sales of multiple sclerosis (MS) drug Tecfidera and spinal muscular atrophy (SMA) drug, Spinraza. Sales, however, marginally beat the Zacks Consensus Estimate of $3.35 billion.

Product Sales Decline

Product sales in the quarter were $2.69 billion, down 7% year over year. Royalties on sales of Roche’s RHHBY Ocrevus were $272 million in the quarter, up 45% year over year. Revenues from Biogen’s share of Rituxan and Gazyva operating profits declined 29% from the year-ago period to $288 million. Other revenues rose 15% in the quarter to $126 million.

Multiple Sclerosis Revenues

Biogen’s MS revenues were $2.26 billion in the reporter quarter, including Ocrevus royalties, which declined 4% year over year. Biogen receives royalties on U.S. sales of Roche’s Ocrevus.

Tecfidera sales declined 15% to $953 million in the quarter hurt by the launch of multiple generics products in the United States. Tecfidera sales were also below the Zacks Consensus Estimate of $1.10 billion.

In June, a district court of West Virginia invalidated the ‘514 patent related to Tecfidera in a lawsuit filed by Mylan MYL, opening doors for early generic competition. The ‘514 patent covers the treatment of multiple sclerosis with 480mg dose of dimethyl fumarate (DMF), the active ingredient of Tecfidera. However, generics were not expected to be launched before 2021.

Vumerity, launched in the United States late in 2019, recorded $15 million in sales, higher than $9 million in the previous quarter. The launch uptake of the drug has been slow due to lower new patient starts and switches due to COVID-19 and reduced physician interaction.

Total Fumarates (Tecfidera + Vumerity) revenues were $968 million in the quarter, down 14% year over year.  U.S. Fumarates sales in the quarter were $684.2 million, down 19% year over year. Ex-U.S. sales were $283.3 million, up 1% year over year.

Tysabri sales rose 7% year over year to $516 million. Tysabri U.S. sales rose 15.7% to $304.2 million in the quarter. International revenues declined 3.8% to $212.3 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $474 million, down 11% year over year. Avonex revenues declined 9% from the year-ago quarter to $381 million. Plegridy contributed $93 million to revenues, down 15% year over year.

Other Products

Sales of key SMA drug, Spinraza declined 10% year over year to $495 million. Spinraza U.S. sales were $182.5 million in the quarter, down 22.9% year over year due to dosing delays resulting from COVID-19. In ex-U.S. markets, Spinraza sales were almost flat year over year at $311.9 million.

In the quarter, biosimilars revenues rose 13% year over year to $208 million. Samsung Bioepis, the joint venture between Biogen and Samsung BioLogics, markets three anti-TNF biosimilars in the EU — Flixabi (a biosimilar referencing J&J [JNJ]/Merck’s Remicade), Benepali (a biosimilar referencing Amgen/Pfizer’s Enbrel) and Imraldi (a biosimilar referencing AbbVie’s Humira).

Imraldi generated sales of $56 million in the quarter, up 14% year over year. Benepali recorded sales of $124 million in the quarter, up 7% year over year. Flixabi sales of $27 million rose 49% year over.

Research and development (R&D) expenses were flat year over year at $540 million. Selling, general and administrative (SG&A) expenses declined 4% year over year to $569 million.

Biogen’s board of directors authorized a new share buyback plan of $5 billion on Oct 20.

2020 Guidance

Biogen lowered its sales and earnings guidance for the year due to expected erosion from Tecfidera generics. The company said that the earlier guidance assumed no generic entry for Tecfidera in 2020. With multiple generic versions of the drug now launched, the company expects a significant erosion of Tecfidera sales in the fourth quarter of 2020.

Revenues in 2020 are now expected in the range of $13.2-$13.4 billion versus 13.8-$14.2 billion expected previously. Earnings per share are now expected between $32.50 and $33.50 per share versus $34.00 and $36.00 previously.

Our Take

Biogen beat estimates on both counts. However, the stock declined in pre-market trading due to the slump in sales of Tecfidera and the cut in 2020 guidance. Biogen’s stock has declined 10% this year so far compared with a decrease of 1.9% for the industry.


The earlier-than-expected launch of Tecfidera generics significantly hurt sales of Biogen’s branded drug and resulted in the guidance cut. Meanwhile, sales of Spinraza are being hurt due to COVID-19 and the drug’s competitive environment is also getting challenging. The initial rollout of Vumerity has been slow due to COVID-19 and this coupled with Tecfidera generic entrants makes the future of Biogen’s MS franchise uncertain. However, the approvability of Biogen’s controversial Alzheimer’s drug, aducanumab, has improved after FDA granted priority tag to its biologics license application (BLA) in August. With the FDA granting priority review to the BLA, a decision is expected on Mar 7, 2021. An FDA advisory committee meeting is scheduled on Nov 6. A marketing authorization application in the EU was filed this month

If aducanumab is approved by the FDA, it will become the first medicine to be approved to reduce the clinical decline associated with this devastating disease, thus opening up a huge market opportunity for Biogen.

Biogen has a Zacks Rank #4 (Sell) currently.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen Inc. Price, Consensus and EPS Surprise

Biogen Inc. Price, Consensus and EPS Surprise
Biogen Inc. Price, Consensus and EPS Surprise

Biogen Inc. price-consensus-eps-surprise-chart | Biogen Inc. Quote

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