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Biogen (BIIB) Q4 Earnings Top, Stock Down on Weak 2022 View
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Biogen (BIIB - Free Report) reported fourth-quarter 2021 earnings per share of $3.39, which beat the Zacks Consensus Estimate of $3.32. In the year-ago quarter Biogen had recorded a loss of $1.05 per share.
Sales came in at $2.73 billion, down 4% (both actual and constant currency basis) from the year-ago quarter, hurt by lower sales of Tecfidera and Spinraza. Sales, however, beat the Zacks Consensus Estimate of $2.62 billion.
Product sales in the quarter were $2.19 billion, down almost 5% year over year. Royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus were $261.2 million in the quarter, down 29% year over year. Biogen receives royalties on U.S. sales of Roche’s MS drug, Ocrevus.
Revenues from Biogen’s share of Roche’s drugs, Rituxan and Gazyva declined 29.4% from the year-ago period to $152.9 million due to biosimilar competition. Other revenues declined 4.4% in the quarter to $126.2 million.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.79 billion in the reporter quarter, including Ocrevus royalties, which declined 1% (both actual and constant currency basis) year over year.
Tecfidera sales declined almost 20% to $486.5 million in the quarter as multiple generic products have been launched in the United States.
New drug Vumerity recorded $124.9 million in sales, higher than $120.9 million in the previous quarter.
Tysabri sales rose 7.9% year over year to $512.7 million.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $377.7 million, down 17.2% year over year.
Other Products
Sales of spinal muscular atrophy (SMA) drug Spinraza declined 12% (10% on a constant currency basis) year over year to $441 million.
In the quarter, biosimilars revenues rose 12% year over year (13% in constant currency) to $221 million.
Biogen markets three anti-TNF biosimilars in Europe — Flixabi (a biosimilar referencing Remicade), Benepali (a biosimilar referencing Enbrel) and Imraldi (a biosimilar referencing Humira) through Samsung Bioepis, the joint venture with its South Korean partner, Samsung Biologics. Last month, Biogen announced an agreement with Samsung Biologics to sell its equity stake in Samsung Bioepis for a payment of up to $2.3 billion. With the acquisition of Biogen’s 49.9% stake in Samsung Bioepis, Samsung Biologics will have full ownership of the joint venture.
New Alzheimer’s drug, Aduhelm, approved in June 2021, recorded sales of $1.0 million in the fourth quarter, compared to $0.3 million in the previous quarter. The launch of the drug has been slow as patient access is limited and Biogen generated only $3 million in sales in 2021.
In January 2022, the Centers for Medicare & Medicaid Services (CMS) released a proposed National Coverage Determination (NCD) decision for the class of anti-amyloid antibodies like Aduhelm. Per the NDC, Medicare proposes covering FDA-approved drugs like Aduhelm only for patients enrolled in qualifying clinical studies. The final decision is expected in April. If the draft decision is approved finally in April, it will restrict patient access to Aduhelm and hurt sales of the drug in 2022 as well. However, the final decision could vary from the draft ruling.
In December 2021, Biogen lowered the wholesale acquisition cost (WAC) of Aduhelm by approximately 50% effective Jan 1, 2022, expecting the demand to improve as a result.
Research and development (R&D) expenses were $700 million, down 59% year over year. Selling, general and administrative (SG&A) expenses declined 2.2% year over year to $785 million.
2021 Results
For 2021, Biogen generated revenues of $10.98 billion, down 19% year over year on a constant currency basis.
For the same period, the company reported earnings of $19.22 per share, down 20.3% year over year.
2022 Guidance Issued
The company announced its total revenue as well as earnings guidance for 2022.
Total revenues are expected in the range of $9.7-$10.0 billion in 2022. The guidance range falls short of the Zacks Consensus Estimate of $10.38 billion. The company expects continued erosion of Tecfidera’s sales in the United States while generics are also expected to be launched in the EU in the first half of 2022. The launch of generics will erode the drug’s ex-U.S. sales. The guidance also assumes significant erosion of Rituxan in the United States. The guidance assumes minimal revenues from Aduhelm in 2022. Earlier, Biogen expected Aduhelm sales to increase in 2022 after remaining modest in 2021.
Adjusted earnings are expected in a range of $14.25-$16.00, which also falls significantly short of the Zacks Consensus Estimate of $18.98 per share.
Adjusted R&D expense is expected in the range of $2.2 billion to $2.3 billion. Adjusted SG&A costs are expected between $2.5 billion and $2.6 billion.
The reduction in revenues from Tecfidera and Rituxan, both high-margin products, is expected to reduce Biogen’s gross margin percentage in 2022.
Our Take
Biogen beat estimates on both counts. However, the company’s financial guidance for 2022 was well short of expectations, which led the shares to decline more than 3% in pre-market trading.
Biogen’s stock has declined 6.3% this year so far compared with a decrease of 10.8% for the industry
Image Source: Zacks Investment Research
Biogen is having a tough time as multiple generic versions of blockbuster drug, Tecfidera have been launched, which are significantly eroding the drug’s sales. Spinraza’s sales are being hurt by the negative impact of COVID-19 and a lower rate of new patient starts due to increased competition.
Though Biogen believes in Aduhelm’s long-term potential, its launch has been slow due to limited patient access amid a lack of clarity on Aduhelm reimbursement. Biogen expects minimal Aduhelm revenues in 2022 due to the uncertainty around reimbursement.
However, the company has implemented some cost-reduction measures including downsizing of its global Alzheimer’s infrastructure while making additional investments in pipeline and strategic initiatives such as new product launches. If the final NCD decision is not broader than the proposed NCD, Biogen may implement further cost initiatives.
The sale of its stake in the biosimilars JV will strengthen Biogen cash position. The upfront cash can be used for acquiring another pipeline candidate, which fits well with Biogen’s portfolio.
A couple of better-ranked biotech stocks include Vertex Pharmaceuticals (VRTX - Free Report) and Dynavax Technologies Corporation (DVAX - Free Report) , both with a Zacks Rank #2 (Buy).
Vertex’s stock has surged 18.7% in the past year. Estimates for Vertex’s 2022 earnings have gone up from $13.85 to $15.31 over the past 60 days.
Vertex topped earnings estimates in each of the last four quarters. Vertex has a four-quarter earnings surprise of 10.01%, on average.
Dynavax’s stock has surged 29.4% in the past year. Estimates for Dynavax’s 2022 earnings have gone up from $1.07 to $1.18 over the past 60 days.
Dynavax topped earnings estimates in each of the last four quarters. Dynavaxhas a four-quarter earnings surprise of 90.42%, on average.
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Biogen (BIIB) Q4 Earnings Top, Stock Down on Weak 2022 View
Biogen (BIIB - Free Report) reported fourth-quarter 2021 earnings per share of $3.39, which beat the Zacks Consensus Estimate of $3.32. In the year-ago quarter Biogen had recorded a loss of $1.05 per share.
Sales came in at $2.73 billion, down 4% (both actual and constant currency basis) from the year-ago quarter, hurt by lower sales of Tecfidera and Spinraza. Sales, however, beat the Zacks Consensus Estimate of $2.62 billion.
Product sales in the quarter were $2.19 billion, down almost 5% year over year. Royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus were $261.2 million in the quarter, down 29% year over year. Biogen receives royalties on U.S. sales of Roche’s MS drug, Ocrevus.
Revenues from Biogen’s share of Roche’s drugs, Rituxan and Gazyva declined 29.4% from the year-ago period to $152.9 million due to biosimilar competition. Other revenues declined 4.4% in the quarter to $126.2 million.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.79 billion in the reporter quarter, including Ocrevus royalties, which declined 1% (both actual and constant currency basis) year over year.
Tecfidera sales declined almost 20% to $486.5 million in the quarter as multiple generic products have been launched in the United States.
New drug Vumerity recorded $124.9 million in sales, higher than $120.9 million in the previous quarter.
Tysabri sales rose 7.9% year over year to $512.7 million.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $377.7 million, down 17.2% year over year.
Other Products
Sales of spinal muscular atrophy (SMA) drug Spinraza declined 12% (10% on a constant currency basis) year over year to $441 million.
In the quarter, biosimilars revenues rose 12% year over year (13% in constant currency) to $221 million.
Biogen markets three anti-TNF biosimilars in Europe — Flixabi (a biosimilar referencing Remicade), Benepali (a biosimilar referencing Enbrel) and Imraldi (a biosimilar referencing Humira) through Samsung Bioepis, the joint venture with its South Korean partner, Samsung Biologics. Last month, Biogen announced an agreement with Samsung Biologics to sell its equity stake in Samsung Bioepis for a payment of up to $2.3 billion. With the acquisition of Biogen’s 49.9% stake in Samsung Bioepis, Samsung Biologics will have full ownership of the joint venture.
New Alzheimer’s drug, Aduhelm, approved in June 2021, recorded sales of $1.0 million in the fourth quarter, compared to $0.3 million in the previous quarter. The launch of the drug has been slow as patient access is limited and Biogen generated only $3 million in sales in 2021.
In January 2022, the Centers for Medicare & Medicaid Services (CMS) released a proposed National Coverage Determination (NCD) decision for the class of anti-amyloid antibodies like Aduhelm. Per the NDC, Medicare proposes covering FDA-approved drugs like Aduhelm only for patients enrolled in qualifying clinical studies. The final decision is expected in April. If the draft decision is approved finally in April, it will restrict patient access to Aduhelm and hurt sales of the drug in 2022 as well. However, the final decision could vary from the draft ruling.
In December 2021, Biogen lowered the wholesale acquisition cost (WAC) of Aduhelm by approximately 50% effective Jan 1, 2022, expecting the demand to improve as a result.
Research and development (R&D) expenses were $700 million, down 59% year over year. Selling, general and administrative (SG&A) expenses declined 2.2% year over year to $785 million.
2021 Results
For 2021, Biogen generated revenues of $10.98 billion, down 19% year over year on a constant currency basis.
For the same period, the company reported earnings of $19.22 per share, down 20.3% year over year.
2022 Guidance Issued
The company announced its total revenue as well as earnings guidance for 2022.
Total revenues are expected in the range of $9.7-$10.0 billion in 2022. The guidance range falls short of the Zacks Consensus Estimate of $10.38 billion. The company expects continued erosion of Tecfidera’s sales in the United States while generics are also expected to be launched in the EU in the first half of 2022. The launch of generics will erode the drug’s ex-U.S. sales. The guidance also assumes significant erosion of Rituxan in the United States. The guidance assumes minimal revenues from Aduhelm in 2022. Earlier, Biogen expected Aduhelm sales to increase in 2022 after remaining modest in 2021.
Adjusted earnings are expected in a range of $14.25-$16.00, which also falls significantly short of the Zacks Consensus Estimate of $18.98 per share.
Adjusted R&D expense is expected in the range of $2.2 billion to $2.3 billion. Adjusted SG&A costs are expected between $2.5 billion and $2.6 billion.
The reduction in revenues from Tecfidera and Rituxan, both high-margin products, is expected to reduce Biogen’s gross margin percentage in 2022.
Our Take
Biogen beat estimates on both counts. However, the company’s financial guidance for 2022 was well short of expectations, which led the shares to decline more than 3% in pre-market trading.
Biogen’s stock has declined 6.3% this year so far compared with a decrease of 10.8% for the industry
Biogen is having a tough time as multiple generic versions of blockbuster drug, Tecfidera have been launched, which are significantly eroding the drug’s sales. Spinraza’s sales are being hurt by the negative impact of COVID-19 and a lower rate of new patient starts due to increased competition.
Though Biogen believes in Aduhelm’s long-term potential, its launch has been slow due to limited patient access amid a lack of clarity on Aduhelm reimbursement. Biogen expects minimal Aduhelm revenues in 2022 due to the uncertainty around reimbursement.
However, the company has implemented some cost-reduction measures including downsizing of its global Alzheimer’s infrastructure while making additional investments in pipeline and strategic initiatives such as new product launches. If the final NCD decision is not broader than the proposed NCD, Biogen may implement further cost initiatives.
The sale of its stake in the biosimilars JV will strengthen Biogen cash position. The upfront cash can be used for acquiring another pipeline candidate, which fits well with Biogen’s portfolio.
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-eps-surprise-chart | Biogen Inc. Quote
Stocks to Consider
A couple of better-ranked biotech stocks include Vertex Pharmaceuticals (VRTX - Free Report) and Dynavax Technologies Corporation (DVAX - Free Report) , both with a Zacks Rank #2 (Buy).
Vertex’s stock has surged 18.7% in the past year. Estimates for Vertex’s 2022 earnings have gone up from $13.85 to $15.31 over the past 60 days.
Vertex topped earnings estimates in each of the last four quarters. Vertex has a four-quarter earnings surprise of 10.01%, on average.
Dynavax’s stock has surged 29.4% in the past year. Estimates for Dynavax’s 2022 earnings have gone up from $1.07 to $1.18 over the past 60 days.
Dynavax topped earnings estimates in each of the last four quarters. Dynavaxhas a four-quarter earnings surprise of 90.42%, on average.