We expect Biogen, Inc. BIIB to beat expectations when it reports fourth-quarter and full-year 2020 results on Feb 3, before market open. In the last reported quarter, the company delivered an earnings surprise of 9.68%.
The company’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company has a four-quarter earnings surprise of 14.92%, on average.
Biogen Inc (NASDAQ:BIIB). Price and EPS Surprise
Biogen Inc. price-eps-surprise | Biogen Inc. Quote
Biogen’s stock has risen 3.6% in the past year against an increase of 14.4% for the industry.
Factors to Consider
Biogen’s fourth-quarter MS revenues, excluding Ocrevus royalties, are likely to have declined over year. Among Biogen’s MS drugs, sales of Tecfidera are likely to have declined steeply hurt by the launch of multiple generics products in the United States. In June and September 2020, district courts in West Virginia and Delaware, respectively invalidated the ‘514 patent related to Tecfidera in lawsuits filed by several generic makers, opening doors for early generic competition. The ‘514 patent covers the treatment of multiple sclerosis with 480mg dose of dimethyl fumarate (DMF), the active ingredient of Tecfidera. Multiple generic versions of the drug were launched in the third quarter of 2020.
Sales of another MS drug, Tysabri may have benefited from patient growth. However, the impact of rising cases of COVID-19 infections on Tysabri sales is to be seen.
The Zacks Consensus Estimate for sales of Tecfidera in the fourth quarter is pegged at $561 million while that for Tysabri is $478 million.
Sales of new MS drug Vumerity are likely to have been hurt by lower new patient starts and switches due to COVID-19 and reduced physician interaction. However, in the third quarter, the company saw some improvement in new patient starts. It remains to be seen if the positive trend continued in the fourth quarter.
Biogen receives royalties on U.S. sales of Roche’s RHHBY (OTC:RHHBY) newly launched MS drug, Ocrevus, which is expected to have contributed to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $248 million.
Lower rate of new patient starts due to COVID-19 and the impact of loading dose dynamics as patients transition to dosing once every four months might have hurt Spinraza’s sales in the United States. Outside the United States, sales of Spinraza might have increased though lower prices in some international markets might have hurt sales. The Zacks Consensus Estimate for sales of Spinraza is $486 million.
Biosimilars revenues improved sequentially in the third quarter. However, sales continued to be impacted by slowdown in new treatments and reduced clinic capacity for immunology patients as a result of COVID-19. It remains to be seen if their sales recovered in the fourth quarter when the company reports. The Zacks Consensus Estimate for sales of biosimilars is $210 million.
Key Development in Q4
In November 2020, an FDA advisory committee voted against approving aducanumab for Alzheimer’s disease. The biologics license application (BLA) filing for aducanumab included data from the ENGAGE and EMERGE phase III studies as well as the phase Ib PRIME study in patients with early-stage Alzheimer’s disease. The Peripheral and Central Nervous System (PCNS) Drugs Advisory Committee voted 8 to 1 with 2 uncertain that data from the EMERGE study on aducanumab (which had met the primary endpoint) does not provide strong evidence to support the efficacy of aducanumab for treating Alzheimer’s when viewed independently, regardless of data from the ENGAGE study (did not meet primary endpoint).
The FDA’s decision was expected on Mar 7. However, last week, the FDA extended the review period by three months and will now give its decision on Jun 7.
In November, Biogen and Sage Therapeutics SAGE announced a global collaboration and license agreement for developing and commercializing potential breakthrough therapies in depression and movement disorders. The agreement includes development of two candidates from Sage Therapeutics’ pipeline — zuranolone (SAGE-217) and SAGE-324. The transaction is expected to close soon.
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 the 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: Biogen’s Earnings ESP is + 6.93% as the Most Accurate Estimate of $5.23 is pegged higher than the Zacks Consensus Estimate of $4.89. 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.
Another Stock to Consider
Here is a large biotech stock that also has the right combination of elements to beat on earnings this time around:
Vertex Pharmaceuticals (NASDAQ:VRTX) Incorporated VRTX has an Earnings ESP of +5.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Biogen Inc. (BIIB): Free Stock Analysis Report
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