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Biogen (BIIB) Q4 Earnings Miss, Revenues Surpass Estimates

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Biogen Inc. (BIIB - Free Report) reported fourth-quarter 2020 earnings per share of $4.58, which missed the Zacks Consensus Estimate of $4.93. Earnings declined 45.1% year over year due to lower revenues.

Revenues in the reported quarter came in at $2.85 billion, down 22% from the year-ago quarter, hurt by lower sales of multiple sclerosis (“MS”) drug Tecfidera and spinal muscular atrophy (“SMA”) drug, Spinraza. Sales, however, beat the Zacks Consensus Estimate of $2.82 billion.

Product Sales Fall

Product sales in the quarter were $2.30 billion, down 21.2% year over year. Royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus were $202.4 million in the quarter, down 1.5% year over year. Revenues from Biogen’s share of Rituxan and Gazyva operating profits declined 45.3% from the year-ago period to $216.5 million. Other revenues also declined 9.3% in the quarter to $132.1 million.

Multiple Sclerosis Revenues

Biogen’s MS revenues were $1.81 billion in the reporter quarter, including Ocrevus royalties, which declined 24% year over year. Biogen receives royalties on U.S. sales of Roche’s Ocrevus.

Tecfidera sales declined 47.6% to $607.9 million in the quarter, hurt by the launch of multiple generic products in the United States.

Notably, 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 including Mylan , opening doors for early generic competition. The ‘514 patent covers the treatment of multiple sclerosis with 480mg dose of dimethyl fumarate, the active ingredient of Tecfidera. Multiple generic versions of the drug were launched, which significantly hurt sales of the drug.

Vumerity, launched in the United States late in 2019, recorded $38.9 million in sales, higher than $15 million in the previous quarter. The launch uptake of the drug has been slow due to lower new patient starts and switches due to the COVID-19 pandemic.

Total Fumarates (Tecfidera + Vumerity) revenues were $646.8 million in the quarter, down 44.6% year over year.  U.S. Fumarates sales in the quarter were $358.6 million, down 59.4% year over year. Ex-U.S. sales were $288.2 million, up 1.3% year over year.

Tysabri sales rose 0.5% year over year to $475.2 million. Tysabri’s U.S. sales rose 0.4% to $270.7 million in the quarter, while international revenues increased 0.5% to $204.5 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $456 million, down 11.7% year over year. Avonex revenues declined 13.3% from the year-ago quarter to $356.4 million. Plegridy contributed $99.6 million to revenues, down 5.6% year over year.

Other Products

Sales of key SMA drug, Spinraza, declined 8.3% year over year to $498 million. Spinraza’s U.S. sales were $159.5 million in the quarter, down 34.3% year over year due to dosing delays resulting from COVID-19. In ex-U.S. markets, Spinraza sales rose 12.7% year over year to $338.5 million.

In the quarter, biosimilars revenues rose 1% year over year to $197 million. Samsung Bioepis, the joint venture between Biogen and Samsung BioLogics, markets three anti-TNF biosimilars in the EU — Flixabi (a biosimilar referencing J&J [(JNJ - Free Report) /Merck’s Remicade], Benepali (a biosimilar referencing Amgen/Pfizer’s Enbrel) and Imraldi (a biosimilar referencing AbbVie’s Humira).

Benepali recorded sales of $117.6 million in the quarter, down 6.7% year over year. Flixabi sales of $26.1 million rose 43.4% year over year. Imraldi generated sales of $53.7 million in the quarter, up 3.8% year over year.

Research and development (R&D) expenses were $642 million, down 7.2% year over year. Selling, general and administrative (SG&A) expenses increased 20% year over year to $793 million.

Full-Year Results

For 2020, Biogen generated revenues of $13.4 billion, reflecting 6.9% decline year over year.

For the same period, the company reported earnings of $33.70 per share, almost flat year over year.

2021 Guidance

The company expects total revenues in the range of $10.45-$10.75 billion in 2021. The Zacks Consensus Estimate stands at $11.12 billion. With multiple generic versions of Tecfidera now launched, the company expects a significant erosion of the drug’s sales during the first half of 2021.

Earnings per share are expected between $17 and $18.50. The Zacks Consensus Estimate is pegged at $24.54 per share. Capital expenditures are anticipated between $375-$425 million.

Notably, the guidance assumes the approval of Biogen’s controversial Alzheimer’s drug, aducanumab, in the United States by Jun 7, 2021. However, uncertainty looms large on the FDA’s final decision. Upon potential approval, the company plans to launch the drug immediately. Though the company expects only modest revenues in 2021, the same might ramp up thereafter.

We remind investors that FDA’s decision on aducanumab was earlier expected on Mar 7. However, last month, the FDA extended the review period by three months and will now give its decision on Jun 7.

In November 2020, an FDA advisory committee voted against approving aducanumab for Alzheimer’s disease. Aducanumab is also under regulatory review in Japan and Europe.

Our Take

Biogen missed estimates while beat on revenues. The stock declined in pre-market trading due to an unimpressive guidance for 2021 as it may have hurt investors’ sentiments. However, Biogen’s stock has rallied 13.4% so far this year, compared with the industry’s increase of 7.9%.

price chart for BIIB

The earlier-than-expected launch of Tecfidera generics significantly hurt sales of Biogen’s branded drug and resulted in year-over-year decline in revenues. Meanwhile, sales of Spinraza are being hurt due to COVID-19 and the drug’s competitive environment is also getting challenging. The initial rollout of Vumerity has been slow due to COVID-19 and this, coupled with Tecfidera generic entrants, makes the future of Biogen’s MS franchise uncertain.

Also, if aducanumab is approved by the FDA, it will become the first medicine to be approved to reduce the clinical decline associated with this devastating disease, which can open up a huge market opportunity for Biogen.

Biogen Inc. Price, Consensus and EPS Surprise

Biogen Inc. Price, Consensus and EPS Surprise

Biogen Inc. price-consensus-eps-surprise-chart
| Biogen Inc. Quote

Zacks Rank

Biogen currently has 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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