Biogen (BIIB) Surpasses Q4 Earnings And Sales Estimates

Biogen Inc. (NASDAQ:BIIB) reported fourth-quarter 2019 earnings per share of $8.34, which comprehensively beat the Zacks Consensus Estimate of $8.00. Earnings rose 19% year over year, backed by higher revenues and lower operating expenses.

Sales of this neuroscience-focused biotech came in at $3.67 billion, up 4% from the year-ago quarter. Sales also beat the Zacks Consensus Estimate of $3.54 billion.

Revenue growth was principally driven by higher sales of its key multiple sclerosis (“MS”) drugs, continued global growth of spinal muscular atrophy (“SMA”) drug, Spinraza, and expansion of its biosimilar business.

Quarter in Detail

Product sales in the quarter were $2.9 billion, up 4% year over year. Royalties on sales of Roche’s (OTC:RHHBY) MS drug, Ocrevus were $205 million in the quarter, up 35% 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 3% from the year-ago period to $395 million. Other revenues declined 12% in the quarter to $146 million.

Biogen’s MS revenues of $2.39 billion in the reporter quarter, including Ocrevus royalties, rose 2% year over year as well as sequentially.

Tecfidera sales rose 5% year over year to $1.16 billion driven by global revenue growth. Tecfidera global sales were up 3% sequentially. U.S. sales in the quarter were $877 million, up 2.4% year over year while ex-U.S. sales were $284.3 million, up 11.9%.

Tysabri sales rose 2% year over year but declined 2% sequentially to $473 million. Tysabri U.S. sales rose 4.9% to $269.5 million in the quarter. International revenues declined 2% to $203.4 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $516 million, down 14% year over year. Avonex revenues declined 15% from the year-ago quarter to $411 million. Plegridy contributed $106 million to revenues, down 9% year over year.

Sales of Spinraza increased 16% year over year driven by higher sales in the United States as well as ex-U.S. markets but declined 1% sequentially to $543.0 million.

Spinraza U.S. sales were $243 million in the quarter, up 2.8% year over year. In ex-U.S. markets, Spinraza sales rose 28.5% year over year to $300 million.

The number of patients on Spinraza grew approximately 2% in the United States and 10% outside the United States sequentially.

Samsung (KS:005930) Bioepis, the joint venture between Biogen and Samsung BioLogics, markets three anti-TNF biosimilars in the EU — Flixabi (a biosimilar referencing J&J (NYSE:JNJ) /Merck’s Remicade), Benepali (a biosimilar referencing Amgen/Pfizer’s Enbrel) and Imraldi (a biosimilar referencing AbbVie’s [ (NYSE:ABBV) ] Humira). Imraldi generated sales of $52 million in the fourth quarter compared with $49 million in the third quarter. Benepali recorded sales of $126 million in the quarter, up 1% year over year. Flixabi sales of $18 million rose 29% year over year. During the quarter, the company acquired commercialization rights to biosimilars referencing two eye drugs — Roche’s Lucentis and Regeneron’s Eylea.

Research and development (R&D) expenses declined 15% year over year to $692 million. Selling, general and administrative (SG&A) expenses were down 12% year over year to $662 million.

Full-Year Results

The company reported 2019 earnings per share of $33.57, which beat the Zacks Consensus Estimate of $33.20. Earnings rose 28% year over year, backed by higher revenues, lower tax rate and lower operating expenses.

Revenues came in at $14.38 billion, which increased 7% year over year and exceeded the Zacks Consensus Estimate of $14.24 billion.

2020 Guidance

Biogen expects revenues of $14-$14.3 billion. Earnings per share are expected between $31.50 and $33.50.

The Zacks Consensus Estimate for revenues and earnings currently stands at $14.1 billion and $32.98 per share, respectively.

Our Take

Biogen beat estimates for both earnings and sales in the fourth quarter. However, guidance for 2020 suggests a year-over-year decline in revenues as well as earnings. In the past year, Biogen’s shares have declined 15.4% compared with the industry’s decrease of 5.6% 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. The company expanded its pipeline to include seven new candidates targeting multiple indications. In October 2019, the company received approval for a new MS Drug, Vumerity. Moreover, its plans to file regulatory application for Alzheimer’s disease candidate, aducanumab, looks promising.

However, Biogen is heavily reliant on sales of its drugs for MS, which is a highly competitive disease space. Also, potential competition to Spinraza from Novartis’ oral gene therapy for SMA Type 1, Zolgensma, which was approved by the FDA for use in children less than 2 years old in May 2019, is a concern.

Zacks Rank

Biogen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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