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Biogen
[NASDAQ:BIIB] shares surged 3.96% on Wednesday to close at $276.34 per share after the company reported total revenues of $2.78 billion in the third-quarter ended September 2015, up 10.76% year-over-year and
non-GAAP diluted earnings per share (EPS) of $4.16, up 14.6% year-over-year. Wall Street was expecting earnings of $3.79 per share on revenues of $2.65 billion. The company also announced a corporate restructuring, which includes the termination of a number of pipeline programs and an 11% reduction in its workforce, or 880 jobs.
The company reported Tecfidera (dimethyl fumarate) sales of $937.4 million, compared to $787.1 million, up 19.10% year-on-year. Interferon revenues, including Avonex (interferon beta-1a) and Plegridy
(peginterferon beta-1a), were $685.1 million, down 7.64%, compared to $741.8 million in the same quarter last year. The company said that interferon revenues increased 18% in the U.S. versus the second-quarter of 2015, primarily due to a rebalancing of wholesaler inventory from the drawdown in the second-quarter of 2015. Tysabri
(natalizumab) revenues were down 4.3% to $479.7 million, compared to $501.2 million in the same quarter last year.
Net revenues relating to cancer drugs Rituxan (rituximab) and Gazyva
(obinutuzumab) from Biogen’s unconsolidated joint business arrangement were $337 million compared to $291 million in the same quarter last year. Hemophilia drugs, Alprolix and
Eloctate, posted sales of $65.7 million and $90.6 million, respectively, compared to $25.3 million and $21.6 million in the third-quarter 2014.
Looking forward, Biogen bumped up its revenue growth forecast to approximately 8% to 9% compared to 2014, from its previous guidance of 6% and 8%, largely due to revised downward expectations for the growth of
Tecfidera. For 2015, the company increased its adjusted EPS outlook to between $16.20 and $16.50 per share, from previous guidance between $15.50 and $15.95 per share.
The company said that its Phase 3 ASCEND study investigating natalizumab in the treatment of secondary progressive multiple sclerosis did not achieve its primary and secondary endpoints. Biogen has also discontinued several programs, including its Phase 3 program for Tecfidera in secondary progressive MS, the development of anti-TWEAK in lupus nephritis, and certain activities in immunology and fibrosis research.
Biogen said they are still continuing the development of Tysabri (natalizumab) for acute ischemic stroke, despite that the results from the Phase 2 study failed to meet its primary objective in a mid-stage study of stroke patients. Biogen is currently globally enrolling people with early Alzheimer’s disease for ENGAGE and EMERGE Phase 3 clinical trial studies to assess the efficacy and safety of its investigational Alzheimer’s drug BIIB037 (aducanumab), a monoclonal antibody that binds to and may lower levels of toxic beta amyloid beta in the brain.
In April 2015, the U.S. Food and Drug Administration (FDA) accepted for review the Biologics License Application for Zinbryta (daclizumab high-yield process) for the treatment of relapsing forms of multiple sclerosis. The FDA announced in May that it will consider marketing approval of Zinbryta which is being jointly developed by Biogen and AbbVie [NYSE:ABBV].
Biogen is still facing patent litigation from Danish company, Forward Pharma [NASDAQ:FWP], over patent rights for the small molecule dimethyl fumarate, the same active compound in Biogen’s Tecfidera. In November 2014, Forward Pharma filed a patent infringement lawsuit against Biogen in Germany and asked for damages. U.S. Patent and Trademark Office (USPTO) declared an interference between Forward Pharma and Biogen in April. According to RBC Capital analyst Michael Yee, oral arguments are slated for January 9, 2017.
In early September, Biogen won a favorable inter partes review decision against a petition filed by Hayman Capital
Management hedge fund manager Kyle Bass, as the USPTO declined to hold a trial on the validity of a patent for Tecfidera. According to Reuters, the Bass group had argued that the Tecfidera patent, which covered a specific dosing regimen for patients, was obvious in light of previously known treatment methods.
BIIB has tumbled 12.18% since September 21, along with the biotech and healthcare sectors, after U.S. presidential candidate Hillary Clinton went on a Twitter frenzy and sent out a tweet about “outrageous” price gouging by a pharmaceutical CEO. From our technical viewpoint, the stock is on a downside trend but several symmetrical triangle chart patterns have emerged, meaning there are several supports. The long-term trendline support still holds and the stock could move higher from here.
In a Bloomberg report, Cowen analyst Ken Cacciatore and Evercore ISI analyst Umer Raffat think that Allergan [NYSE:AGN] might be interested to acquire Biogen as the deal could provide some strategic overlap with Allergan’s central nervous system franchise, Botox. Cowen assumes a 33% takeover premium, which would take the stock to $360 per share, based on Wednesday's closing price of $276.34 per share.
Biogen will release its fourth quarter 2015 earnings report in January 2016. Wall Street is expecting revenues of $2.7 billion, up 2.4% year-on-year, and an EPS of $4.04 per share, down 1.2% year-on-year.
Disclosure: Long Positions in BIIB, ABBV and AGN. No positions in other companies mentioned. |
