3 Key Factors To Look Out For In Biogen's Q1 Results

This week, earnings season for the pharma and biotech sector will start in earnest with several major companies scheduled to report results.

Biotech major, Biogen, Inc. (NASDAQ:BIIB) , is one of the companies that will be reporting results tomorrow. A look at Biogen’s earnings track record shows that the company has surpassed expectations in each of the last four quarters with an average surprise of 5.86%. But, for Q1, Biogen has an Earnings ESP of -0.81%. Earnings estimates for the quarter are down a couple of cents over the last 7 days. Moreover, a look at consensus estimates for Q1 shows that revenues are expected to decline 5% sequentially to $2.728 billion. We note that Q1 revenues will include about a month’s contribution (approximately $75 million) from the hemophilia franchise prior to its spin-off in February.

Year-to-date, Biogen has underperformed the Zacks-categorized Medical-Biomedical/Genetics industry which is up 1.8% while the company’s shares are down 3.7%.

Here are three key factors that investors will be focusing on when the company reports tomorrow.

Performance of the MS Franchise: Biogen is a well-known name in the multiple sclerosis (MS) market where the company has a strong presence. However, competition in this market has intensified. Q1 sales are usually lackluster due to factors like seasonality, inventory drawdown as well as the impact of change in insurance coverage. Biogen could also witness a decline in the number of patients using Avonex and Plegridy combined as the market continues to shift to other platforms. With the MS franchise accounting for a major part of the company’s revenues, investors will be focused on the performance of Tecfidera, Tysabri as well as recently launched Ocrevus. Even though Biogen is entitled to receive tiered royalties on Ocrevus sales in the U.S. (ranging from 13.5% to 24%), Ocrevus is expected to impact sales of the other MS products in Biogen’s portfolio.

Spinraza Sales Ramp Up: The Dec 2016 FDA approval of Biogen’s spinal muscular atrophy (SMA) treatment, Spinraza (nusinersen), was a major positive for the stock with the drug being the first and only treatment to be approved in the U.S. for SMA. Being a key product approval for the company, investors will be focused on the sales ramp up of this drug. Although Spinraza has blockbuster potential, revenue uptake for the drug could well be slow considering the reimbursement process and coverage restrictions by insurers like Anthem.

Alzheimer’s Disease (AD) Pipeline: Biogen is among the key players working on bringing an Alzheimer’s disease treatment to market. Developing treatments for AD is highly challenging and costly with quite a few companies like Eli Lilly and Company (NYSE:LLY) and Merck & Co., Inc. (NYSE:MRK) stumbling in their efforts in this field. Biogen’s AD pipeline comprises candidates like aducanumab (an amyloid beta antibody currently in phase III development) as well as a couple of partnered candidates (with Eisai) -- elenbecestat (E2609), a BACE inhibitor and BAN2401, a humanized beta amyloid antibody. Moreover, last week, Biogen announced a licensing agreement with Bristol-Myers Squibb Company (NYSE:BMY) for exclusive rights to BMS-986168, an anti-tau candidate. BMS-986168 is phase II-ready with potential in AD as well as progressive supranuclear palsy (PSP).

Biogen is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Moreover, you can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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