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Biogen (BIIB) to Report Q1 Earnings: What's in the Cards?

Zacks Equity Research

Biogen, Inc. BIIB will report first-quarter 2020 results on Apr 22, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 4.12%.

The company’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company has a four-quarter positive earnings surprise of 9.33%, on average.

 

Biogen Inc. Price and EPS Surprise

 

Biogen Inc. Price and EPS Surprise

 

 

 

 

 

 

 

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

Biogen’s stock has risen 15.5% this year so far compared with an increase of 2% for the industry.

 

 

Factors to Consider

Biogen’s fourth-quarter MS revenues, excluding Ocrevus royalties, declined over year. It remains to be seen if MS revenues improved in the first quarter when the company reports results. Biogen receives royalties on U.S. sales of Roche’s RHHBY newly launched MS drug, Ocrevus, which is likely to have contributed significantly to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $174 million.

Among the MS drugs, Tecfidera’s revenues are likely to have been supported by global patient growth. Sales of another MS drug, Tysabri may have risen though partly offset by impact of Ocrevus launch.

The Zacks Consensus Estimate for first-quarter sales of Tecfidera is pegged at $1.05 billion while that for Tysabri is $458 million.

Meanwhile, combined interferon revenues (Avonex and Plegridy) are likely to have declined due to transition of patients to other oral or high efficacy MS therapies as well as higher discounts and allowance.

Spinraza sales are likely to have been driven by continued patient growth in U.S. markets as well as in existing and newly launched ex-U.S. markets. The Zacks Consensus Estimate for sales of Spinraza is $550 million.

In the second half of 2019, Biogen witnessed some negative impact of Novartis’ new SMA treatment, Zolgensma’s launch on Spinraza’s U.S. sales within the infant population. Zolgensma is approved to treat children under two years old, which represents about 5% of the prevalent market. We expect this negative trend to have continued in the first quarter of 2020.

Also, on the fourth-quarter conference call, Biogen had said that in 2020, Spinraza’s sales growth rate is likely to moderate from 2019 levels, primarily due to a lower rate of new patient starts as well as the impact of loading dose dynamics as patients transition to dosing once every four months. An update is expected on the first-quarter conference call.

Vumerity, for relapsing forms of MS, was launched in the United States late in the fourth quarter of 2019 and recorded $5 million of revenues in the quarter. We expect the drug’s sales to have been higher in the first quarter of 2020.

Interestingly, biosimilars contributed significantly to Biogen’s top line in 2019 driven mainly by Imraldi’s launch, a trend that most likely continued in the first quarter. The Zacks Consensus Estimate for sales of biosimilars is $204 million.

Importantly, on the first- quarter earnings call, investors will also focus on whether Biogen provides an updated business outlook for 2020 to include the impact of coronavirus. There is a concern about supply chain disruptions, caused by the outbreak, hurting drug/biotech companies’ first-half earnings

Meanwhile, with half of the world under a lockdown in the latter part of the quarter, a delay is likely in the completion of clinical studies, which could further delay drug approvals and their launch. Investors will look for any such updates from Biogen. In March, Biogen warned that the pandemic may impact the timeline of some clinical studies, particularly those that are actively enrolling and monitoring patients.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Biogen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of $7.65 and the Zacks Consensus Estimate of $7.71, is -0.83%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Biogen has a Zacks Rank #2.

Stocks to Consider

Here are some large biotech stocks that have the right combination of elements to beat on earnings this time around:

Gilead Science GILD with an Earnings ESP of +12.23% and a Zacks Rank #3. The company is scheduled to release results on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals ALXN has an Earnings ESP of +0.62% and a Zacks Rank #2. The company is scheduled to release results on May 6.

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