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Biogen (BIIB) Beats on Q2 Earnings & Sales, Ups 2022 Guidance

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Biogen (BIIB - Free Report) reported second-quarter 2022 earnings per share (EPS) of $5.25, which significantly beat the Zacks Consensus Estimate of $4.10. In the year-ago quarter, Biogen had recorded earnings of $5.25 per share.

Sales came in at $2.59 billion, down 7% on a reported basis (5% on a constant currency basis) from the year-ago quarter, hurt by lower sales of Tecfidera and Spinraza. Sales, however, beat the Zacks Consensus Estimate of $2.47 billion.

Product sales in the quarter were $2.05 billion, down 8.1% year over year. Royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus were $291.9 million in the quarter, up 13.6% year over year. Revenues from Biogen’s share of Roche’s drugs, Rituxan and Gazyva declined 21% from the year-ago period to $144.0 million due to biosimilar competition for Rituxan. Other revenues declined 1% in the quarter to $97.9 million.

Multiple Sclerosis Revenues

Biogen’s MS revenues were $1.72 billion in the reporter quarter, including Ocrevus royalties, which declined 4% on a reported basis and 3% on a constant currency basis year over year.

Tecfidera sales declined 18.4% to $397.9 million in the quarter as multiple generic products have been launched in the United States. U.S. Tecfidera revenues declined 32.3% to $120.7 million. Outside U.S. revenues decreased 10.4% to $277.2 million, hurt by pricing pressure.

Biogen expects the entry of generics in European markets to hurt the drug’s international sales going forward. However, Biogen said it is difficult to predict when generics will be launched.

New drug Vumerity recorded $136.8 million in sales, up 50.5% year over year.

Total Fumarates (Tecfidera + Vumerity) revenues were $534.7 million in the quarter, down 7.1% year over year. 

Tysabri sales declined 1.5% year over year to $516.2 million.

Combined interferon revenues (Avonex and Plegridy) in the quarter were $350.2 million, down 12.5% year over year.

Other Products

Sales of spinal muscular atrophy (SMA) drug Spinraza declined 14% (11% on a constant currency basis) year over year to $431.1 million due to a decrease in demand as a result of increased competition.

In the quarter, biosimilars revenues decreased 4% year over year (3% in constant currency) to $194 million.

Aduhelm, approved in June 2021, recorded sales of $0.1 million in the second quarter, compared with $2.8 million in the previous quarter. In April 2022, The Centers for Medicare & Medicaid Services (“CMS”) released its final National Coverage Determination (NCD) decision for the class of anti-amyloid antibodies approved by the FDA like Aduhelm. Per the final NCD decision, Medicare said it will cover FDA-approved drugs like Aduhelm only for patients enrolled in CMS-approved studies. The final NCD decision basically denied all Medicare beneficiaries access to Aduhelm, which will reduce future demand for Aduhelm to a minimal level. As a result of the NCD decision, Biogen said it will substantially wind down commercial operations for Aduhelm, retaining only minimal resources to manage patients’ access programs.

Research and development (R&D) expenses were $529 million, down 9.6% year over year. Selling, general and administrative (SG&A) expenses declined 10.2% year over year to $570 million.

2022 Guidance Increased

The company raised its previously issued total revenues as well as earnings guidance for 2022.

Total revenues are expected in the range of $9.9 to $10.1 billion in 2022, up from $9.7-$10.0 billion expected previously. The company expects continued erosion of Tecfidera’s sales in the United States. The guidance also assumes significant erosion of Rituxan in the United States due to biosimilar competition.

Adjusted earnings are expected in the range of $15.25 to $16.75, up from the prior expectation of $14.25-$16.00.

Adjusted R&D expense is expected in the range of $2.2 billion to $2.3 billion, the same as previous expectations. Adjusted SG&A is expected to be between $2.3 billion and $2.4 billion, unchanged from the previous expectations.

The adjusted tax rate is expected to be between 15.5% and 16.5%.

Our Take

Biogen beat estimates on both counts. The company also raised its financial guidance for 2022. However, shares declined 1.4% in pre-market trading.

Biogen’s stock has declined 8.2% this year so far compared with a decrease of 22.3% for the industry.

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A better-than-expected sales performance and cost savings prompted the guidance increase. Following the failure of Aduhelm, Biogen announced a set of near-term operational priorities to drive renewed growth and value creation over time. The initiatives are resulting in significant cost savings.

Biogen is facing multiple challenges at present like generic erosion of Tecfidera, competitive pressure for Spinraza, a declining profit share from Rituxan in the United States and Aduhelm’s failure. However, potential new product launches such as lecanemab, zuranolone and additional biosimilars can help revive growth.

In July, the FDA accepted Biogen and partner Eisai’s biologics license application (“BLA”), seeking accelerated approval for its anti-amyloid beta protofibril antibody candidate lecanemab to treat early Alzheimer’s disease. With the FDA granting priority review to the BLA, a decision is expected on Jan 6, 2023. With regard to zuranolone, Biogen and partner Sage Therapeutics have initiated the rolling submission of a new drug application (NDA) to the FDA for zuranolone for the potential treatment of major depressive disorder. The NDA submission is expected to be completed in the second half of 2022.

In biosimilars, Biogen launched Byooviz, the first biosimilar referencing Roche’s Lucentis, in the United States in the second quarter. Biogen expects it to be a meaningful top-line contributor from 2023.

Zacks Rank & Stocks to Consider

Biogen has a Zacks Rank #3 (Hold) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen Inc. Price, Consensus and EPS Surprise

Biogen Inc. Price, Consensus and EPS Surprise

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

Some better-ranked large drugmakers are Merck (MRK - Free Report) and AbbVie (ABBV - Free Report) . While Merck sports a Zacks Rank of 1, AbbVie has a Zacks Rank of 2 (Buy).

Merck’s stock has risen 20.5% this year so far. Earnings estimates for 2022 have gone up from $7.19 per share to $7.31 per share, while that for 2023 have increased from $7.12 per share to $7.15 per share over the past 90 days.

Merck topped earnings estimates in three of the last four quarters. Merck has a four-quarter earnings surprise of 13.42%, on average.

AbbVie stock is up 10.6% this year so far. Earnings estimates for 2023 have gone up from $11.81 per share to $11.86 per share over the past 60 days.

Earnings of AbbVie beat estimates in three of the last four quarters and were in line on one occasion, the average surprise being 1.01%.

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