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Biogen (BIIB) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research
·5 min read

Biogen, Inc. BIIB will report third-quarter 2020 results on Oct 21, before market open. In the last reported quarter, the company delivered an earnings surprise of 27.77%.

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 earnings surprise of 15.22%, on average.

Biogen Inc. Price and Consensus

Biogen Inc. Price and Consensus
Biogen Inc. Price and Consensus

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

Biogen’s stock has declined 5.6% this year so far against an increase of 0.3% for the industry.

 

 

Factors to Consider

Biogen’s second-quarter MS revenues, excluding Ocrevus royalties, declined over year. It remains to be seen if MS sales trends improved in the third quarter.

Among the MS drugs, we believe that that COVID-19 is unlikely to have had a significant impact on Tecfidera sales in the third quarter as the majority of Tecfidera prescriptions in the United States are delivered via mail. Patient growth is likely to have driven sales of Tecfidera in the quarter.

Sales of another MS drug, Tysabri may have been hurt due to the impact of COVID-19 given delays in dosing at infusion sites. Tysabri is administered in a hospital setting. This means that hospitals may have delayed Tysabri infusions as they prioritized treatment of COVID-19 patients or patients may have chosen to delay treatment.

The Zacks Consensus Estimate for sales of Tecfidera in the third quarter is pegged at $1.10  billion while that for Tysabri is $445 million.

Sales of new MS drug Vumerity, are likely to have been hurt by lower new patient starts and switches due to COVID-19 and reduced physician interaction. The initial sales uptake of the drug, launched last year has been slow.

Biogen receives royalties on U.S. sales of Roche’s RHHBY newly launched MS drug, Ocrevus, which is likely to have contributed to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $213 million.

Dosing delays resulting from COVID-19 might have hurt Spinraza’s sales in the United States in the third quarter as it is administered in a physician's office. On the second-quarter conference call, the company had said that the dosing delays peaked in April and began to normalize in May and June. The new patient starts and sales trends might have been better in the third quarter compared to the second. Outside the United States, sales of Spinraza might have increased though lower prices in some international markets might have hurt sales. The Zacks Consensus Estimate for sales of Spinraza is $516 million.

Biosimilars revenues declined in the second quarter due to the negative impact of COVID-19. It remains to be seen if their sales improved in the third quarter. The Zacks Consensus Estimate for sales of biosimilars is $196 million.

SG&A costs are expected to have risen in the third quarter as the company prepares for commercial launch of aducanumab.

On the conference call, management may be questioned about its plans to counter potential generic competition to Tecfidera. In June, a district court of West Virginia invalidated the ‘514 patent related to Tecfidera in a lawsuit filed by Mylan. The ‘514 patent covers the treatment of multiple sclerosis with 480mg dose of dimethyl fumarate (DMF), the active ingredient of Tecfidera. The patent has also been challenged in a Delaware district court. Though Biogen plans to appeal the West Virginia court’s decision, if the Delaware court gives a decision similar to the West Virginia court ruling, then a Tecfidera generic could be introduced as early as 2021, much earlier than 2028 when the patent expires.

Key Development in Q3

In August, the FDA granted priority review to Biogen/Eisai’s biologics license application (BLA) seeking approval of aducanumab for Alzheimer’s disease. With the FDA granting priority review to the BLA, a decision is expected on Mar 7, 2021. The BLA filing includes data from the ENGAGE and EMERGE phase III studies as well as the phase Ib PRIME study in patients with early-stage Alzheimer’s disease. If aducanumab is approved by the FDA, it will become the first medicine to be approved to reduce the clinical decline associated with Alzheimer’s disease, thus opening up a huge market opportunity for Biogen.

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 $8.03 and the Zacks Consensus Estimate of $8.06, is -0.38%. 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 #4 (Sell).

Stocks to Consider

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

Vertex Pharmaceuticals Incorporated VRTX has an Earnings ESP of +0.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck MRK has an Earnings ESP of +2.60% and a Zacks Rank #3.

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Biogen Inc. (BIIB) : Free Stock Analysis Report
 
Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
Merck Co., Inc. (MRK) : Free Stock Analysis Report
 
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
 
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