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Biogen Inc. (BIIB) Down 0.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Biogen Inc. (BIIB - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Biogen Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Q2 Earnings & Sales Beat
Biogen reported second-quarter 2023 adjusted earnings per share (EPS) of $4.02, beating the Zacks Consensus Estimate of $3.77. Earnings declined 23% year over year due to lower revenues. On a constant currency basis, earnings were flat.
Sales came in at $2.46 billion, down 5% on a reported basis (down 3% on a constant-currency basis) from the year-ago quarter, hurt by lower sales of multiple sclerosis (MS) drugs like Tecfidera and Tysabri and rising competitive pressure in the MS market. Sales beat the Zacks Consensus Estimate of $2.38 billion.
Product sales in the quarter were $1.85 billion, down 10.2% year over year Revenues from anti-CD20 therapeutic programs declined 1% to $433.4 million. The revenues include royalties on sales of Roche’s Ocrevus and Biogen’s share of Roche’s drugs, Rituxan, Gazyva and Lunsumio. Contract manufacturing and royalty revenues rose 102% in the quarter to $197.5 million. The contract manufacturing and royalty revenues includes revenues from the manufacturing of Leqembi.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.21 billion in the reporter quarter, down 15% on a reported basis and 14% on a constant currency basis year over year.
Tecfidera sales declined 36% to $254.2 million as multiple generic versions of the drug have been launched in the United States. Tecfidera sales were better than our model estimate of $234.9 million but missed the Zacks Consensus Estimate of $271 million.
Tecfidera’s regulatory market protection in the EU has been extended until February 2025. As of June 2023, some of the Tecfidera generics launched were present in a few EU markets along with some generic products in the channel.
Vumerity recorded $146.2 million in sales, up 6.9% driven by higher sales volumes in international markets. Vumerity sales beat the Zacks Consensus Estimate of $141 million.
Total Fumarates (Tecfidera + Vumerity) revenues were $400.4 million in the quarter, down 25.1% year over year.
Tysabri sales declined 6.4% year over year to $483.1 million, which missed the Zacks Consensus Estimate as well as our estimate of $487 million. Tysabri sales are being hurt by increased competition and higher discounts.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $302.4 million, down 13.6%, hurt by a continued shift from the injectable platform to oral or high-efficacy therapies.
In 2023, MS revenues are expected to decline as a result of increasing competition for many of MS products. A potential biosimilar of Tysabri may be launched in the United States and European markets later in 2023.
Other Products
Sales of Spinraza rose 1% on a reported basis and 5% on a constant currency basis to $437 million. Spinraza sales were slightly better than the Zacks Consensus Estimate of $434 million but missed our model estimate of $445.6 million.
Spinraza’s U.S. sales rose 11.4% year over year driven by patient growth and higher pricing. In ex-U.S. markets, Spinraza sales declined 3.4% at actual currency due to currency headwinds and unfavorable pricing.
Biogen expects that favorable data from studies and expected overall market improvement should help continued improved performance for Spinraza in the United States. Spinraza revenue growth is expected to be relatively flat in 2023
In the quarter, biosimilars revenues were flat year over year at $195 million. However, on a constant currency basis, biosimilar revenues rose 4%.
Biosimilars revenues are expected to be modest in 2023 as the continued launch of Byooviz is expected to make up for pricing pressure in certain markets.
Biogen recorded a loss of $20 million of Alzheimer’s disease revenues, which included product revenues from Alzheimer’s drug, Aduhelm and Biogen’s portion of profit share from the Leqembi collaboration with Eisai. Leqembi revenues represent 50% of end-market revenues, less 50% of commercialization expenses.
In 2023, Biogen expects to continue to recognize a reduction to Alzheimer’s revenues, with commercial expense exceeding initial revenues.
Regarding Leqembi, Biogen said the launch is underway in the United States. The company said it is getting reimbursement beyond CMS. It has Medicaid reimbursement in 48 out of the 50 states and has also received a good response from commercial insurers. However, sales are expected to be slightly slow in 2023 and then pick up 2024 onward.
Research and development expenses were $584.0 million, up 11% year over year. Adjusted selling, general and administrative expenses declined 4% year over year to $548.0 million, driven by the company’s cost-saving initiatives, which made up for new product launch costs.
No shares were repurchased in the second quarter of 2023. Biogen had $2.05 billion remaining under its share buyback plan of $5 billion, which was authorized in October 2020.
2023 Guidance Issued
The company maintained its previously issued earnings and sales guidance for 2023.
Total revenues are expected to decline at a mid-single-digit percentage in 2023 from the 2022 level.
Adjusted earnings are expected in the range of $15.00 to $16.00 per share.
Overall, operating expenses are expected to be lower in the second half of 2023 than in the first half due to cost-saving initiatives.
New Restructuring Program
As Biogen’s focus shifts to the new Alzheimer’s drug Leqembi, it announced a new restructuring program, which is expected to result in a headcount reduction of approximately 1,000 employees. The program is expected to generate approximately $1 billion in gross cost savings. Out of these savings, around $300 million are expected to be re-invested in new product launches and R&D activities, which should further save costs of $700 million by 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Biogen Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Biogen Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Biogen Inc. (BIIB) Down 0.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Biogen Inc. (BIIB - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Biogen Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Q2 Earnings & Sales Beat
Biogen reported second-quarter 2023 adjusted earnings per share (EPS) of $4.02, beating the Zacks Consensus Estimate of $3.77. Earnings declined 23% year over year due to lower revenues. On a constant currency basis, earnings were flat.
Sales came in at $2.46 billion, down 5% on a reported basis (down 3% on a constant-currency basis) from the year-ago quarter, hurt by lower sales of multiple sclerosis (MS) drugs like Tecfidera and Tysabri and rising competitive pressure in the MS market. Sales beat the Zacks Consensus Estimate of $2.38 billion.
Product sales in the quarter were $1.85 billion, down 10.2% year over year Revenues from anti-CD20 therapeutic programs declined 1% to $433.4 million. The revenues include royalties on sales of Roche’s Ocrevus and Biogen’s share of Roche’s drugs, Rituxan, Gazyva and Lunsumio. Contract manufacturing and royalty revenues rose 102% in the quarter to $197.5 million. The contract manufacturing and royalty revenues includes revenues from the manufacturing of Leqembi.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.21 billion in the reporter quarter, down 15% on a reported basis and 14% on a constant currency basis year over year.
Tecfidera sales declined 36% to $254.2 million as multiple generic versions of the drug have been launched in the United States. Tecfidera sales were better than our model estimate of $234.9 million but missed the Zacks Consensus Estimate of $271 million.
Tecfidera’s regulatory market protection in the EU has been extended until February 2025. As of June 2023, some of the Tecfidera generics launched were present in a few EU markets along with some generic products in the channel.
Vumerity recorded $146.2 million in sales, up 6.9% driven by higher sales volumes in international markets. Vumerity sales beat the Zacks Consensus Estimate of $141 million.
Total Fumarates (Tecfidera + Vumerity) revenues were $400.4 million in the quarter, down 25.1% year over year.
Tysabri sales declined 6.4% year over year to $483.1 million, which missed the Zacks Consensus Estimate as well as our estimate of $487 million. Tysabri sales are being hurt by increased competition and higher discounts.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $302.4 million, down 13.6%, hurt by a continued shift from the injectable platform to oral or high-efficacy therapies.
In 2023, MS revenues are expected to decline as a result of increasing competition for many of MS products. A potential biosimilar of Tysabri may be launched in the United States and European markets later in 2023.
Other Products
Sales of Spinraza rose 1% on a reported basis and 5% on a constant currency basis to $437 million. Spinraza sales were slightly better than the Zacks Consensus Estimate of $434 million but missed our model estimate of $445.6 million.
Spinraza’s U.S. sales rose 11.4% year over year driven by patient growth and higher pricing. In ex-U.S. markets, Spinraza sales declined 3.4% at actual currency due to currency headwinds and unfavorable pricing.
Biogen expects that favorable data from studies and expected overall market improvement should help continued improved performance for Spinraza in the United States. Spinraza revenue growth is expected to be relatively flat in 2023
In the quarter, biosimilars revenues were flat year over year at $195 million. However, on a constant currency basis, biosimilar revenues rose 4%.
Biosimilars revenues are expected to be modest in 2023 as the continued launch of Byooviz is expected to make up for pricing pressure in certain markets.
Biogen recorded a loss of $20 million of Alzheimer’s disease revenues, which included product revenues from Alzheimer’s drug, Aduhelm and Biogen’s portion of profit share from the Leqembi collaboration with Eisai. Leqembi revenues represent 50% of end-market revenues, less 50% of commercialization expenses.
In 2023, Biogen expects to continue to recognize a reduction to Alzheimer’s revenues, with commercial expense exceeding initial revenues.
Regarding Leqembi, Biogen said the launch is underway in the United States. The company said it is getting reimbursement beyond CMS. It has Medicaid reimbursement in 48 out of the 50 states and has also received a good response from commercial insurers. However, sales are expected to be slightly slow in 2023 and then pick up 2024 onward.
Research and development expenses were $584.0 million, up 11% year over year. Adjusted selling, general and administrative expenses declined 4% year over year to $548.0 million, driven by the company’s cost-saving initiatives, which made up for new product launch costs.
No shares were repurchased in the second quarter of 2023. Biogen had $2.05 billion remaining under its share buyback plan of $5 billion, which was authorized in October 2020.
2023 Guidance Issued
The company maintained its previously issued earnings and sales guidance for 2023.
Total revenues are expected to decline at a mid-single-digit percentage in 2023 from the 2022 level.
Adjusted earnings are expected in the range of $15.00 to $16.00 per share.
Overall, operating expenses are expected to be lower in the second half of 2023 than in the first half due to cost-saving initiatives.
New Restructuring Program
As Biogen’s focus shifts to the new Alzheimer’s drug Leqembi, it announced a new restructuring program, which is expected to result in a headcount reduction of approximately 1,000 employees. The program is expected to generate approximately $1 billion in gross cost savings. Out of these savings, around $300 million are expected to be re-invested in new product launches and R&D activities, which should further save costs of $700 million by 2025.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Biogen Inc. has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Biogen Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.