Can Biogen (BIIB) Keep The Earnings Streak Alive In Q4?

Let’s see how things have shaped up for this announcement.

Factors to Consider

Biogen’s third-quarter MS revenues, excluding Ocrevus royalties, were almost flat over year and we expect fourth-quarter performance to have been similar. Biogen receives royalties on U.S. sales of Roche’s (OTC:RHHBY) newly launched MS drug, Ocrevus which is likely to have contributed significantly to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $192 million.

Among the MS drugs, Tecfidera’s U.S. revenues are likely to have been supported by patient growth. Meanwhile, ex U.S. Tecfidera revenues are likely to have benefited from volumes increases in Europe and Japan in the fourth quarter, which might have offset the impact of ongoing price decreases in certain European countries. U.S. sales of another MS drug, Tysabri may have been hurt by Ocrevus launch.

The Zacks Consensus Estimate for sales of Tecfidera in the fourth quarter is pegged at $1.13 billion while that for Tysabri is $466 million.

Meanwhile, combined interferon revenues (Avonex and Plegridy) are likely to have declined due to transition of patients to other oral or high efficacy MS therapies as well as higher discounts and allowance.

Spinraza sales are likely to have been driven by continued patient growth in U.S. markets across both mature and new markets and strong performance in established markets such as EU and Japan in ex-U.S. segment. The Zacks Consensus Estimate for sales of Spinraza is $549 million.

On the third-quarter conference call, Biogen had said that it witnessed some negative impact of Novartis’ new SMA treatment, Zolgensma’s launch on Spinraza’s U.S. sales in this segment. Zolgensma is approved to treat children under two years old, which represents about 5% of the prevalent market. An update is expected on the fourth-quarter conference call.

Interestingly, biosimilars contributed significantly to Biogen’s top line in the first three quarters of 2019 driven mainly by Imraldi’s launch, a trend that most likely continued in the fourth quarter. The Zacks Consensus Estimate for sales of biosimilars is $201 million.

Importantly, in October, Biogen revealed controversial plans to pursue U.S. regulatory approval of aducanumab based on positive results of a new analysis of larger dataset from the discontinued ENGAGE and EMERGE studies, which became available after the studies were ceased.

In March, Biogen and Eisai had discontinued ENGAGE and EMERGE following a futility analysis, which relied on an earlier and smaller dataset. Biogen, in October, had said that a new analysis of the larger dataset showed a different outcome than the one predicted at the time of the futility analysis. In October, Biogen said it plans to submit a biologics license application (BLA) seeking approval of aducanumab to the FDA in early 2020.

Numerous investor questions are expected on Biogen’s timeline for filing the regulatory application for aducanumab on the call.

Earnings Whispers

Our proven model predicts an earnings beat for Biogen in the soon-to-be-reported quarter because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise.

Earnings ESP: Biogens Earnings ESP is +3.95% as the Zacks Consensus Estimate of $7.95 is lower than the Most Accurate Estimate of $8.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Biogen has a Zacks Rank #3.

Other Stocks to Consider

Here are some other large biotech stocks that also have the right combination of elements to beat on earnings this time around:

Gilead Sciences (NASDAQ:GILD) with an Earnings ESP of +4.45% and a Zacks Rank #3. The company is scheduled to release results on Feb 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion (NASDAQ:ALXN) has an Earnings ESP of +5.97% and a Zacks Rank #1. The company is scheduled to release results on Jan 30.

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