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Earnings & Revs Beat from Biogen, Ups View Again

Zacks Equity Research

Biogen Idec (BIIB) reported third quarter earnings per share of $2.35 (including the impact of stock-based compensation expense), well above the Zacks Consensus Estimate of $2.14 and 23.7% above the year-ago earnings. Third quarter 2013 revenues increased 32% to $1.8 billion. Revenues were well above the Zacks Consensus Estimate of $1.7 billion. Newly launched multiple sclerosis (MS) drug, Tecfidera, drove third quarter results.

Including one-time items, third quarter 2013 earnings increased 22.8% to $2.05 per share.

The Quarter in Detail

Third quarter Tysabri revenues increased 46% to $401 million from the year-ago period. Biogen is now booking 100% of Tysabri revenues following its acquisition of Elan’s (ELN) rights in Tysabri. Global in-market net revenues of Tysabri remained flat at $403 million in the third quarter of 2013.

Tysabri global revenues consisted of U.S. revenues of $232 million and ROW (Rest of the World) revenues of $171 million. Revenues grew on a sequential basis.

Meanwhile, Avonex, Biogen’s lead MS product, posted third quarter revenues of $733 million (down 0.4%). On a sequential basis, Avonex revenues were down 5.3%. Avonex revenues in ex-U.S. markets were $277 million.

Rituxan revenues grew 5% to $303 million in the third quarter.

Tecfidera, the latest offering from Biogen’s MS portfolio, continues to impress with sales coming in at $286 million, consisting of patient demand of approximately $272 million, inventory stocking of approximately $12 million and Canada sales of $2 million. Third quarter Tecfidera sales were well above launch quarter sales of $192 million. Biogen reported that according to IMS, Tecfidera is now the leading oral MS therapy in the U.S. Biogen had launched Tecfidera in early April in the U.S.

Raises Guidance Yet Again

Biogen raised its guidance once again for 2013. The company now expects earnings in the range of $8.65 - $8.85 per share on revenue growth of 23% - 25%. The company was previously expecting earnings in the range of $8.25 - $8.50 per share on revenue growth of 22% - 23%. The Zacks Consensus Estimate is currently $8.76 per share.

The company maintained its SG&A guidance of 24% to 26% of total revenues and R&D guidance of 21% to 23% of total revenues.

Our Take

Biogen continues to deliver better-than-expected results with earnings and revenues beating expectations by a huge margin. Third quarter results were primarily driven by the strong performance of Tecfidera. We are also positive on Biogen’s gaining full control over Tysabri.

Key products, Avonex and Tysabri, should continue contributing significantly to sales. Tecfidera should help drive long-term growth. Biogen has several development and regulatory catalysts coming up in the next few quarters.

Biogen currently carries a Zacks Rank #3 (Hold). Shares were up in pre-market trading. At present, companies like Actelion (ALIOF) and Isis Pharmaceuticals (ISIS) look well-positioned. Both are Zacks Rank #1 (Strong Buy) stocks.

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