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Biogen (BIIB) to Report Q2 Earnings: What's in the Cards?

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Biogen (BIIB - Free Report) will report second-quarter 2021 results on Jul 22, before market open. In the last reported quarter, the company delivered an earnings surprise of 5.53%.

The company’s earnings beat estimates in three of the last four quarters while missing in one. The company has a four-quarter earnings surprise of 8.97%, on average.

Biogen Inc. Price and EPS Surprise

Biogen Inc. Price and EPS Surprise

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

Biogen’s stock has risen 32.4% this year so far against a decrease of 3% for the industry

Zacks Investment Research
Image Source: Zacks Investment Research

Factors to Consider

Sales of Biogen’s multiple sclerosis (“MS”) drugs, excluding Ocrevus royalties, has been declining since the past three quarters.MS sales are unlikely to have improved in the second quarter.

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.

Sales of another MS drug, Tysabri may have benefited from volume increases and patient growth, despite increased competitive pressure and price reductions in certain European markets. However, the impact of COVID-19 infections on Tysabri sales remains to be seen when the company reports.

The Zacks Consensus Estimate for second-quarter sales of Tecfidera sales pegged is at $399 million while that for Tysabri is $477 million.

Sales of new MS drug Vumerity are likely to have improved sequentially in the second quarter, continuing the trend observed in the first quarter. The Zacks Consensus Estimate for sales of Vumerity is $84 million.

Biogen receives royalties on U.S. sales of Roche’s (RHHBY - Free Report) newly launched MS drug, Ocrevus which is likely to have contributed to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $239 million.

However, the negative impact of COVID-19 and lower rate of new patient starts due to increased competition in the United States are likely to 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 $483 million.

Biosimilars revenues were hurt by pricing pressure, slowdown in new treatment starts and reduced clinic capacity for immunology patients in Europe as a result of COVID-19 in the first quarter. It remains to be seen if the sales recovered in the second-quarter results. The Zacks Consensus Estimate for sales of biosimilars is $211 million.

Meanwhile, the reduction in revenues from Tecfidera and Biogen’s share of revenues from Rituxan, both high margin products, are expected to have put pressure on gross margins. R&D and SG&A costs are expected to have risen in the second quarter due to new collaborations, program readouts, and investments for commercialization of aducanumab.

Key Developments in Q2

A key development in the quarter was FDA’s accelerated approval to aducanumab, its controversial investigational treatment for Alzheimer’s disease on Jun 7. The drug, to be marketed by the brand name of Aduhelm, has been approved to reduce the accumulation of amyloid beta plaques, a sticky protein, in the brain, which is believed to lead to progression of Alzheimer’s disease. The approval was based on data from the ENGAGE and EMERGE phase III studies and the phase Ib PRIME study in patients with early-stage Alzheimer’s disease.

Aduhelm has become the first medicine to be approved to reduce the clinical decline associated with this devastating disease. It will also be the first medicine to show that removing amyloid beta (plaque in the brain) results in better clinical outcomes in Alzheimer’s patients. Management is expected to discuss the commercialization plans for Aduhelm on the second-quarter conference call and maybe mention the initial sales number.

The FDA approved Aduhelm despite an FDA advisory committee voting against its approval in November last year.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Biogen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Biogen’s Earnings ESP is -0.41% as the Zacks Consensus Estimate is pegged at $4.58 and the Most Accurate Estimate is lower at $4.56. 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.

Stocks to Consider

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

Novartis (NVS - Free Report) has an Earnings ESP of +1.97% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer (PFE - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank #3.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Novartis AG (NVS) - free report >>

Biogen Inc. (BIIB) - free report >>

Roche Holding AG (RHHBY) - free report >>

Pfizer Inc. (PFE) - free report >>

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