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Biogen (BIIB) Stock Down Despite Q1 Earnings & Sales Beat

Zacks Equity Research

Biogen BIIB reported first-quarter 2020 earnings per share of $9.14, which comprehensively beat the Zacks Consensus Estimate of $7.74. Earnings rose 31% year over year, backed by higher revenues.

Sales of this neuroscience-focused biotech giant came in at $3.53 billion, up 1% from the year-ago quarter. Sales also beat the Zacks Consensus Estimate of $3.42 billion.

Revenue growth was principally driven by higher sales of its multiple sclerosis (MS) drugs, spinal muscular atrophy (SMA) drug, Spinraza as well as biosimilar products. However, total revenues declined 4% on a sequential basis.

Product Sales Rise

Product sales in the quarter were $2.91 billion, up 8% year over year. Royalties on sales of Roche’s RHHBY Ocrevus were $162 million in the quarter, up 45% year over year but down 21% sequentially. Revenues from Biogen’s share of Rituxan and Gazyva operating profits declined 12% from the year-ago period to $358 million. Other revenues declined 63% in the quarter to $109 million.

Importantly, Biogen’s first-quarter product sales benefited by approximately $100 million due to accelerated sales as people stocked medicines amid coronavirus-led lockdown, primarily in Europe.

Multiple Sclerosis Revenues

Biogen’s MS revenues of $2.28 billion in the reporter quarter, including Ocrevus royalties, rose 9% year over year but declined 5% sequentially. Biogen receives royalties on U.S. sales of Roche’s Ocrevus.

In the first quarter, decrease in channel inventory hurt U.S. MS product revenues by approximately $115 million against an increase of approximately $145 million in the fourth quarter of 2019.

Tecfidera sales rose 10% year over year to $1.1 billion driven by strong global patient growth. Tecfidera global sales were down 5% sequentially. Vumerity, launched in the United States late in 2019, recorded $2 million in sales, less than $5 million in the fourth quarter of 2019.

Tysabri sales rose 13% year over year and 10% sequentially to $522 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $466 million, down 7% year over year. Avonex revenues declined 8% from the year-ago quarter to $366 million. Plegridy contributed $100 million to revenues, down 4% year over year. Biogen’s U.S. Interferon revenues are experiencing declining trends with patients transitioning to other oral or high efficacy MS therapies.

Other Products

Sales of key SMA drug, Spinraza increased 9% year over year and 4% sequentially to $565.0 million driven by higher sales in the United States as well as ex-U.S. markets. Spinraza U.S. sales were $235.4 million in the quarter, up 5.4% year over year driven by continued patient growth. In ex-U.S. markets, Spinraza sales rose 11.7% year over year to $329.6 million.

The number of patients on Spinraza grew approximately 1% in the United States and 10% outside the United States in the quarter compared with the end of the fourth quarter.

In the quarter, biosimilars revenues increased 25% year over year to $219 million driven by Imraldi. 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 [ABBV] Humira).

Imraldi generated sales of $62 million in the quarter, up 72% year over year. Benepali recorded sales of $133 million in the quarter, up 8% year over year. Flixabi sales of $24 million rose 61% year over.

Research and development (R&D) expenses declined 15% year over year to $476 million. Selling, general and administrative (SG&A) expenses rose 1% year over year to $569 million.

Delay in Aducanumab BLA Filing

In October last year, Biogen had revealed controversial plans to pursue U.S. regulatory approval of aducanumab based on positive results of a new analysis of larger dataset from the discontinued ENGAGE and EMERGE studies, which became available after the studies were ceased. In March, Biogen and Eisai had discontinued ENGAGE and EMERGE following a futility analysis, which relied on an earlier and smaller dataset.

Back in October, Biogen had said it plans to submit a biologics license application (BLA) seeking approval of aducanumab to the FDA in early 2020. However, along with the earnings release, Biogen said it has an open BLA with the FDA and has started to submit modules. However, it has a pre-BLA meeting scheduled in summer 2020. Biogen now expects to complete filing of the BLA in the third quarter of 2020, delayed from the previous expectation of early 2020.

Our Take

Biogen beat estimates for both earnings and sales in the first quarter. However, Biogen did not provide any update on its previously issued 2020 outlook in the earnings release. Despite the earnings and sales beat, its stock declined around 7% in pre-market trading probably due to the delay expected in regulatory filing of aducanumab.

Biogen’s stock has risen 10.9% this year so far compared with an increase of 3.3% for the industry.

 

 

Meanwhile, there is a concern about supply chain disruptions, caused by the coronavirus outbreak, hurting drug/biotech companies’ earnings. Also, with half of the world under a lockdown, it is expected that a delay could occur in the completion of clinical studies of drug/biotech companies, which could further delay drug approvals and their launch. Along these lines, Biogen clarified that it continues to operate its manufacturing facilities to maintain uninterrupted supply of its medicines. Regarding pipeline progress, Biogen believes the pandemic may impact the timeline of some clinical studies. However, it expects most of its important near-term data readouts before end of 2021.

Biogen has a Zacks Rank #2 (Buy). 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-eps-surprise-chart | Biogen Inc. Quote

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