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Biogen's Earnings Surpass Expectations

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Biogen Idec (BIIB - Free Report) reported first quarter earnings per share of $1.96, well above the Zacks Consensus Estimate of $1.57 and 41% above the year-ago earnings. First quarter 2013 revenues increased 10% to $1.415 billion. Revenues were well above the Zacks Consensus Estimate of $1.387 billion. Avonex and Tysabri drove first quarter 2013 revenues. Earnings were boosted by about 17 cents due to a lower tax rate.

Including one-time items, first quarter 2013 earnings increased 43% to $1.79 per share.

The Quarter in Detail

First quarter Tysabri revenues increased 9% to $312 million from the year-ago period. Tysabri revenues increased 5.8% on a sequential basis. Global in-market net revenues of Tysabri came in at $456 million (up 15%) in the first quarter of 2013.

Tysabri global revenues consisted of US revenues of $257 million and ROW (Rest of the World) revenues of $199 million. The sequential improvement in Tysabri revenues is encouraging.

Meanwhile, Avonex, Biogen’s lead multiple sclerosis (MS) product, posted first quarter revenues of $746 million (up 13%). On a sequential basis, Avonex revenues were down 0.9%.

Biogen has been working on driving Avonex revenues. The company launched Avonex Pen in the US last year. Avonex Pen helps improve convenient administration. The rollout of Avonex Pen in the EU and US should increase patient and physician interest in Avonex.

Rituxan revenues declined 7% to $265 million in the first quarter. Biogen’s share of Rituxan revenues was affected by about $42 million due to damages awarded against Genentech in its dispute with Hoechst GmbH.

Raises Guidance

Biogen raised its guidance for 2013. The company expects earnings in the range of $7.80 - $7.90 per share on revenue growth of 16% - 18%. The company was previously expecting earnings in the range of $7.15 - $7.25 per share on 10% revenue growth. We expect significant upward revisions in earnings estimates as the Zacks Consensus Estimate for 2013 currently stands at $7.67 per share, well below the company’s revised guidance range.

The company maintained its R&D (22% to 23% of total revenues) and SG&A guidance (24% to 26% of total revenues).

Our Take

Biogen started 2013 on a strong note with better-than-expected earnings and revenues. The company has shown significant progress with its pipeline – Tecfidera’s approval is a major boost for the stock. We are also positive on Biogen’s gaining full control over Tysabri. Key products, Avonex and Tysabri, should continue contributing significantly to sales. Tecfidera should help drive long-term growth. Biogen has several development and regulatory catalysts coming up in the next few quarters. With Tecfidera approved, we expect investor focus to remain on the product launch.

Biogen currently carries a Zacks Rank #3 (Hold). Companies that currently look well-positioned include Athersys, Inc. (ATHX - Free Report) , Cleveland BioLabs, Inc. and Osiris Therapeutics . All three are Zacks Rank #1 (Strong Buy) stocks.

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