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Biogen, Gilead Earnings Crush Q2 Estimates

Big-cap biotech leaders Biogen Idec (BIIB) and Gilead Sciences (GILD) easily beat second-quarter earnings estimates and received product approvals Wednesday, but their stocks reacted very differently.

Biogenearnings rose 52% vs. a year earlier to $3.49 a share, topping analysts' consensus by 66 cents. Sales grew 40% to $2.4 billion vs. the Street's $2.16 billion.

The company increased its full-year revenue range for 38%-41% growth from 26%-28% and analysts' average of 28.5%. It now sees EPS of $12.90-$13.10, more than $1.50 above its prior guidance. Analysts expected $11.53.

The upside came largely from Tecfidera, the oral multiple-sclerosis drug approved in the U.S. last year and in Europe in early February. Management and analysts expected a slow European launch because Novartis (NVS) entered the market first with its MS pill Gilenya. However, executives said the uptake in the European countries where it has gained reimbursement (mainly Germany) is proceeding at a similar pace to the U.S.

Sales of Tecfidera outside the U.S. were $115 million vs. consensus of $75 million. Domestic sales rose to $585 million, topping estimates by $100 million.

Biogen in Q2 reached a deal with Italy that eliminated that country's reimbursement limit on older MS drug Tysabri, retroactive to February 2013.

The recognition of this revenue added 15 cents to Q2 EPS.

CEO George Scangos disclosed that the EU had approved Biogen's interferon-based MS drug Plegridy, which is still awaiting approval in America. The launch of this drug, along with hemophilia drugs Alprolix and Eloctate, led Biogen to guide sales, general and administrative expenses above expectations at 22%-23% of revenue .

Biogen slightly disappointed the Street by saying phase two trial results for anti-LINGO, which could be the first disease-altering treatment for MS, will be reported in 2016, not next year as hoped. The company wants to wait for 18-month results rather than 12-month. Still, Biogen stock rose 11% to 337.60.

Sovaldi Booms

Gilead earnings, released after the close, vaulted 372% to $2.36 a share, beating by 58 cents. Sales leapt 136% to $6.53 billion, topping views by $67 million.

Hepatitis C drug Sovaldi, just launched in December, generated $3.48 billion in sales, well above consensus of $2.58 billion.

Despite political and industry protests over the $1,000-a-day pill, Gilead said 47 state Medicaid programs cover Sovaldi.

Gilead for the first time gave full-year guidance that included Sovaldi sales: $21 billion to $23 billion vs. $6.9 billion last year. Subtracting its prior guidance, that implies Sovaldi will rake in $11.5 billion in 2014.

But Gilead's whisper numbers seemed to be much higher.

"GILD reported a 2Q that soundly beat SELL side consensus, but was roughly in line with what I perceive to be buy side expectations," wrote ISI Group analyst Mark Schoenebaum in an email to clients. He added that the new revenue guidance agrees with analysts' estimates.

Perhaps for that reason, Gilead stock fell fractionally late, largely erasing a 1% regular-session gain.

Gilead's other major drugs — HIV medicines Atripla, Truvada, Viread, Complera and Stribild — modestly topped consensus, except for Atripla.

In its budding field of cancer medicine, Gilead also said the FDA approved its drug idelalisib, now branded Zydelig, for chronic lymphocytic leukemia, follicular lymphoma and small lymphocytic lymphoma. Analysts expect this to be a blockbuster of more modest proportions than Sovaldi, with sales peaking at $1.5 billion in 2020.

Two other major biotechs report on Thursday: Alexion Pharmaceuticals (ALXN) and Celgene (CELG).