Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5961
    -0.0045 (-0.75%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • OIL

    81.56
    +0.21 (+0.26%)
     
  • GOLD

    2,215.40
    +2.70 (+0.12%)
     

Biogen (BIIB) Up on Q2 Earnings & Sales Beat, Raised View

Biogen Inc. BIIB reported second-quarter 2019 earnings per share of $9.15 which comprehensively beat the Zacks Consensus Estimate of $7.58. Earnings rose 58% year over year, backed by higher revenues and lower R&D costs. Also, a lower share count due to share buybacks in the quarter benefited earnings per share.

Sales of this neuroscience-focused biotech came in at $3.62 billion, up 8% from the year-ago quarter. Sales also beat the Zacks Consensus Estimate of $3.48 billion.

Revenue growth was principally driven by higher sales of its key multiple sclerosis (MS) drug, Tecfidera globally and spinal muscular atrophy (SMA) drug, Spinraza in the United States.

Quarter in Detail

Product sales in the quarter were $2.88 billion, up 4% year over year. Royalties on sales of Roche’s RHHBY MS drug, Ocrevus were $183 million in the quarter, up 62% year over year. Though Ocrevus poses strong competition to Biogen’s MS drugs, the company receives royalties on U.S. sales of Ocrevus from Roche. Revenues from Biogen’s share of Rituxan and Gazyva operating profits increased 4% from the year-ago period to $394 million. Other revenues rose 47% in the quarter to $160 million.

ADVERTISEMENT

Biogen’s MS revenues of $2.4 billion in the reporter quarter, including Ocrevus royalties, rose 3% year over year. In the second quarter, increase in channel inventory added approximately $25 million to U.S. MS product revenues versus an unfavorable impact of approximately $170 million in the first quarter due to a decrease in channel inventory.

Tecfidera sales rose 6% year over year and 15% sequentially to $1.15 billion. U.S. sales in the quarter were $869.8 million, up 5.3% year over year while ex-U.S. sales were $280.4 million, up 7.4%.

Tysabri sales rose 2% year over year and 3% sequentially to $475 million. Tysabri U.S. sales were almost flat at $264.3 million in the quarter. International revenues rose 4.6% to $211.0 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $554 million, down 11% year over year. Avonex revenues declined 13% from the year-ago quarter to $438 million. Plegridy contributed $117 million to revenues, down 6% year over year.

U.S. Interferon revenues have been declining due to transition of patients to other oral or high-efficacy MS therapies as well as higher discounts and allowance.

Sales of Spinraza increased 15% year over year to $488.0 million. Spinraza sales, however, declined 6% sequentially due to lower sales in ex-U.S. markets.

Spinraza U.S. sales were $230.6 million in the quarter, up almost 12% year over year. In ex-U.S. markets, Spinraza sales rose 18.8% year over year to $257.6 million

However ex-U.S. sales declined 12.7% sequentially due to positive pricing adjustment in France in the first quarter, unfavorable timing of shipments and a transition from loading to less-intensive maintenance doses in more mature markets.

The number of patients on Spinraza grew approximately 4% in the United States and 17% outside the United States in the quarter compared with the end of the first quarter.

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). In the quarter, biosimilars revenues increased 44.9% year over year to $184 million in the quarter driven by Imraldi. The drug was launched in mid-October last year. It generated sales of $47 million in the second quarter compared with $35.7 million in the first quarter. Benepali recorded sales of $120 million in the quarter, up 4% year over year. Flixabi sales of $17 million rose 50% year over year.

Research and development (R&D) expenses declined 42% year over year to $477 million, following the closing of the aducanumab studies. In March 2019, Biogen/Eisai announced the discontinuation of ENGAGE and EMERGE phase III studies on aducanumab in early Alzheimer’s disease (AD). A futility analysis conducted by an independent data monitoring committee showed that the studies were unlikely to meet their primary endpoints. Also, R&D costs in the second quarter of 2018 increased by $324 million attributable to an upfront payment made by Biogen to expand its agreement with partner Ionis for the identification of new gene therapies to treat SMA as well as a broad range of neurological diseases.

Selling, general and administrative (SG&A) expenses were up 8% year over year to $553 million.

2019 Guidance

The company raised its full-year expectations for revenues and earnings per share while lowering its costs and tax expense guidance.

The revenue guidance was raised from a range of $13.6-$13.8 billion to $14.0-$14.2 billion.

Earnings per share are now expected between $29.60 and $30.40, an increase from the prior guidance range of $26.65 and $27.65.

R&D costs are expected to be 15.5% to 16.5% of total revenues, less than approximately 16% to 17% expected previously. SG&A costs are expected in the range of 15.5% to 16.5% of total revenues, versus the prior guidance range of approximately 16% to 17%. Adjusted tax rate guidance was lowered from a range of approximately 18% to 19% to 15.5% to 16.5%.

Our Take

Biogen beat estimates for both earnings and sales in the second quarter and upped its financial guidance for the year. Shares rose around 2% in pre-market trading in response. However, this year so far, Biogen’s shares have declined 22.8% this year compared with the industry’s decrease of 0.2% in the same time frame.

 

 

We like Biogen’s efforts to regularly in-license assets to build its pipeline. Several of these assets have transformative potential. In the second quarter alone, Biogen added four new programs to its pipeline including two potentially mid- to late-stage clinical assets in inherited retinal disease from the June 2019 acquisition of gene therapy maker Nightstar Therapeutics.

Several data readouts are expected in 2019/2020 with multiple potential launches in the early 2020s.However, its core MS business, excluding Ocrevus royalties, is facing rising competitive pressure. Also, potential competition to Spinraza from competitors’ gene therapy programs for SMA is a concern. Though Biogen’s CNS pipeline is attractive, it is a high-risk area as evident from the recent failure of aducanumab and uncertainty over the future of others likeBAN2401.

Biogen currently carries a Zacks Rank #3 (Hold). 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 and EPS Surprise

 

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

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Biogen Inc. (BIIB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research