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Biogen (BIIB) Q3 Earnings Top, Aduhelm Sales Negligible

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Biogen, Inc. BIIB reported third-quarter 2021 earnings per share of $4.77, which beat the Zacks Consensus Estimate of $4.15. Earnings however declined 15.4% year over year due to lower revenues.

Sales came in at $2.78 billion, down 18% (both actual and constant currency basis) from the year-ago quarter, hurt by lower sales of Tecfidera and Spinraza. Sales, however, beat the Zacks Consensus Estimate of $2.68 billion.

Product sales in the quarter were $2.21 billion, down 18% year over year. Royalties on sales of Roche’s RHHBY Ocrevus were $264.3 million in the quarter, down 3% year over year. Revenues from Biogen’s share of Rituxan and Gazyva declined 47.5% from the year-ago period to $151.1 million. Other revenues rose 25.5% in the quarter to $157.8 million

Multiple Sclerosis Revenues

Biogen’s MS revenues were $1.82 billion in the reporter quarter, including Ocrevus royalties, which declined 19% (down 20% on constant currency) year over year.

Tecfidera sales declined 47.7% to $498.6 million in the quarter as multiple generic products have been launched in the United States.

Vumerity, launched in the United States late in 2019, recorded $120.9 million in sales, higher than $90.9 million in the previous quarter.

Tysabri sales rose 1.2% year over year to $522.8 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $387.5 million, down 18.3% year over year.

Other Products

Sales of spinal muscular atrophy (SMA) drug Spinraza declined 10% (11% on a constant currency basis) year over year to $444.1 million.

In the quarter, biosimilars revenues declined 2% year over year (4% in constant currency) to $202 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 MRK Remicade), Benepali (a biosimilar referencing Amgen/Pfizer’s Enbrel),and Imraldi (a biosimilar referencing AbbVie’s Humira).

Benepali recorded sales of $120.8 million in the quarter, down 2.7% year over year. Flixabi sales were $24.6 million, down 10.5% year over year. Imraldi sales of $57.4 million rose 2.1% year over year.

New Alzheimer’s drug, Aduhelm, approved in June this year, recorded sales of $0.3 million in the third quarter, less than $1.6 million in the second quarter as the launch of the drug has been slower than expected. Aduhelm’s sales were also much less than the Zacks Consensus Estimate of $14.56 million.

At a conference earlier this year, Biogen said that Aduhelm’s launch is facing some near-term challenges. Biogen’s chief executive officer, Michel Vounatsos said at the conference that the “confusion, misinformation and controversy” surrounding the drug’s clinical data and approval process is responsible for the slower-than-expected launch of Aduhelm. Several large treatment sites have refrained from administering Aduhelm to patients for now. However, the company is confident that the drug’s long-term opportunity remains significant.

Research and development (R&D) expenses were $702 million, down 38% year over year. The R&D costs included approximately $125 million of upfront payments related to a business development deal.

Selling, general and administrative (SG&A) expenses increased 14% year over year to $651 million to support Aduhelm’s launch.

2021 Guidance Upped

The company raised its total revenue as well as earnings guidance for 2021.

Total revenues are expected in the range of $10.8-$10.9 billion in 2021 compared with $10.65-$10.85 billion previously. The Zacks Consensus Estimate stood at $10.76 billion. The company expects significant erosion of Tecfidera’s sales in the United States in 2021. The guidance also assumes significant erosion of Rituxan in the United States. The guidance assumes modest revenues from Aduhelm in 2021. Aduhelm sales are expected to increase in 2022.

The earnings per share guidance was increased from a range of $17.50-$19.00 to $18.85-$19.35. The Zacks Consensus Estimate stood at $18.66 per share. Capital expenditures are anticipated between $250 million and $300 million (previously $375 million and $425 million).

Adjusted R&D expense guidance was maintained in the range of $2.45 billion to $2.55 billion. Adjusted SG&A costs are expected between $2.6 billion and $2.7 billion (maintained).

The reduction in revenues from Tecfidera and Rituxan, both high-margin products, is expected to put pressure on gross margins in 2021.

Our Take

Biogen beat estimates on both counts. The company raised its sales and earnings guidance for the year. Shares rose around 1.4% in pre-market trading in response to the better-than-expected earnings result and increased guidance. Biogen’s stock has risen 9.5% this year so far against a decrease of 11.9% for the industry

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However, multiple generic versions of blockbuster drug, Tecfidera have been launched, which are significantly eroding the drug’s sales. Spinraza’s sales growth rate is being hurt by the negative impact of COVID-19 and a lower rate of new patient starts due to increased competition.

Meanwhile, Aduhelm’s FDA approval faced a lot of criticism about its mixed efficacy results, the FDA selection of the accelerated approval path, and the regulatory process in general. Aduhelm also comes with a hefty price tag of $56,000 a year, which was widely condemned. All these issues seem to have affected demand, patient access and reimbursement for Aduhelm, which has resulted in a slow launch.

Biogen has a Zacks Rank #3 (Hold) 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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