Biotech company, Biogen (BIIB - Analyst Report), reported second quarter 2015 earnings per share of $4.22 per share, well above the Zacks Consensus Estimate of $4.07 and 20.9% above the year-ago earnings.
Biogen Idec Inc. - Earnings Surprise | FindTheBest
The company, however, missed on revenues with second quarter 2015 SALes of $2.591 billion falling short of the Zacks Consensus Estimate of $2.711 billion. Revenues were up 7% from the year-ago period. Currency negatively impacted revenues by $79 million.
The Quarter in Detail
Second quarter Tysabri revenues decreased 13.1% to $463 million (U.S. $269 million, ex-U.S. $195 million) from the year-ago period.
Combined interferon revenues (Avonex and Plegridy), in the second quarter were $690 million (U.S. $455 million, ex-U.S. $235 million), down 10.9% from the year-ago period and 9% sequentially. The company attributed the decline in U.S. revenues to inventory reduction in the wholesale channel. Avonex revenues declined 20.5% to $615.2 million.
Plegridy contributed $74.5 million to second quarter 2015 revenues, up from $61.8 million in the first quarter of 2015.
Rituxan and Gazyva related revenues were $338 million in the second quarter, up 11.6% from the year-ago period.
Oral multiple sclerosis (MS) drug Tecfidera grew 26.1% from the year-ago period to $883 million. This included U.S. sales of $721 million and EU sales of $163 million. Sales grew 7% on a sequential basis. Ex-U.S. sales were affected by lower pricing in Germany.
Alprolix and Eloctate, Biogen’s recently launched hemophilia treatments, recorded revenues of $54 million and $74 million, respectively, showing growth from first quarter 2015 revenues of $43.1 million and $53.6 million, respectively.
Cuts View
Based on revised expectations for Tecfidera growth, Biogen cut its revenue and earnings outlook and now expects earnings of $15.50 - $15.95 per share on revenue growth of 6% - 8%. Earlier in January, the company had guided towards earnings of $16.60 - $17.00 per share on revenue growth of 14% - 16%.
The company continues to expect R&D expense of approximately 19% - 20% of total revenue, and SG&A expense of approximately 20% - 21% of total revenue.
Our Take
Although Biogen surpassed earnings expectations, the revenue miss as well as the lowered outlook is disappointing. Although Tecfidera sales improved on a sequential basis, the company reported a moderation in ITS growth rate. Biogen had reported a moderation in new starts for Tecfidera in the previous two quarters as well.
At that time, Biogen had said that several factors were responsible for this including a decline in the overall market switch rate. The U.S. label update in December following the reporting of a progressive multifocal leukoencephalopathy (PML)-related death of a patient on Tecfidera as well as the recent launch of Plegridy also affected growth. The company had reported that Plegridy has been capturing some interferon switches that would have otherwise gone to Tecfidera.
With news about another Tecfidera-related PML case, it may be challenging for the company to get Tecfidera back on its impressive growth trajectory. The recent entry of a generic version of Teva’s (TEVA - Analyst Report) MS treatment, Copaxone, is another headwind.
However, new products like Plegridy, Eloctate and Alprolix should continue doing well. Biogen also has some pipeline events lined up this year.
Biogen is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include AMAG Pharmaceuticals, Inc. (AMAG - Snapshot Report) and Ligand Pharmaceuticals Incorporated (LGND - Analyst Report). Both are Zacks Rank #1 (Strong Buy) stocks.
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