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Biogen (BIIB - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of $4.36, beating the Zacks Consensus Estimate of $3.99. Earnings, however, declined 9% year over year due to higher R&D costs. On a constant currency basis, earnings were flat.
Sales came in at $2.53 billion, up 1% on a reported basis (3% on a constant-currency basis) from the year-ago quarter, as lower sales of multiple sclerosis (MS) drugs like Tecfidera and Tysabri were partially offset by improved revenues from spinal muscular atrophy drug, Spinraza. Sales beat the Zacks Consensus Estimate of $2.39 billion.
Product sales in the quarter were $1.81 billion, down 8% year over year. Revenues from anti-CD20 therapeutic programs rose 1% to $421.0 million. The revenues include royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus and Biogen’s share of Roche’s drugs, Rituxan, Gazyva and Lunsumio. Contract manufacturing and royalty revenues rose 135% in the quarter to $304.0 million. Contract manufacturing and royalty revenues include Biogen’s 50% share of revenues (including royalties) from the Leqembi collaboration with Eisai and revenues from the manufacturing of Leqembi. Eisai recorded $2 million in sales from the new Alzheimer's drug, Leqembi, in the third quarter.
Leqembi gained full approval from the FDA for early Alzheimer’s disease in the United States and broad reimbursement from the Centers for Medicare & Medicaid Services (CMS) in July. Regulatory applications seeking approval of Leqembi are under review in China and Europe, and some other countries, while it was approved in Japan in September.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.16 billion in the reporter quarter, down 14% on a reported basis and 12% on a constant currency basis year over year.
Tecfidera sales declined 29.4% to $239.5 million as multiple generic versions of the drug have been launched in the United States and new generic launches are ongoing in several EU countries. Tecfidera sales missed the Zacks Consensus Estimate of $245 million.
Vumerity recorded $165.5 million in sales, up 20%. Vumerity sales beat the Zacks Consensus Estimate of $157.0 million and our model estimate of $160.6 million.
Tysabri sales declined 9.7% year over year to $456.3 million, which missed the Zacks Consensus Estimate as well as our estimate of $474 million and $475.1 million, respectively. Tysabri sales are being hurt by increased competition and higher discounts.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $277.7 million, down 17.4%, hurt by a continued shift from the injectable platform to oral or high-efficacy therapies.
Other Products
Sales of Spinraza rose 4% on a reported basis and 7% on a constant currency basis to $448.2 million. Spinraza sales were slightly better than the Zacks Consensus Estimate of 432 million but missed our estimate of $452.4 million.
In the quarter, biosimilar revenues rose 4% on a reported basis and 7% on a constant currency basis year over year to $194 million. A biosimilar of Roche’s Actemra called Tofidence was approved by the FDA in September.
Research and development expenses were $539.0 million, down 2% year over year. Adjusted selling, general and administrative expenses declined 2% year over year to $553.0 million, driven by the company’s cost-saving initiatives.
2023 Guidance Updated
Total revenues are expected to decline by a low-single-digit percentage in 2023 from the 2022 level. Earlier, the company expected revenues to decline by a mid-single-digit percentage.
Adjusted earnings are expected in the range of $14.50 to $15.00, down from the prior expectation of $15.00 to $16.00 per share, reflecting 75 cents dilution from the acquisition of Reata Pharmaceuticals, which closed in September. The acquisition added Reata’s newly approved rare disease drug, Skyclarys, for the treatment of Friedreich’s ataxia to Biogen’s portfolio.
Our Take
Biogen’s third-quarter results were better than expected as it beat estimates on both counts. While it raised its revenue guidance, it lowered its EPS range to include the impact of dilution from the Reata acquisition.
Biogen’s shares were up around 1% in pre-market trading due to a better-than-expected performance in the third quarter and an increase in revenue outlook.
Biogen’s stock has declined 11.2% year to date compared with a decline of 21.3% for the industry.
Image Source: Zacks Investment Research
While most of Biogen’s key drugs are facing declining sales due to intense competitive pressure, Biogen’s new products, such as Leqembi for Alzheimer’s disease, Qalsody for amyotrophic lateral sclerosis with SOD1 mutations and Zurzuvae for depression, could help revive growth. Zurzuvae (zuranolone) was approved by the FDA to treat women with postpartum depression in August and is expected to be launched by the end of 2023. Biogen believes Leqembi has the potential to generate blockbuster sales following its traditional approval and broader CMS coverage in the United States. Biogen expects sales of Leqembi to start growing from 2024.
With its focus shifting to Leqembi, Biogen announced a new restructuring program (called the Fit for Growth initiative) in July, 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 $700 million in costs by 2025.
In the past 30 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 12 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 18 cents. Year to date, shares of DVAX have rallied 25.3%.
In the past 60 days, estimates for MEI Pharma’s 2023 loss per share have improved from $6.54 to $4.89. During the same period, loss per share estimates for 2024 have narrowed from $5.14 to $4.02. Year to date, shares of MEIP have rallied 52.7%.
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Biogen (BIIB) Beats on Q3 Earnings & Sales, Cuts EPS View
Biogen (BIIB - Free Report) reported third-quarter 2023 adjusted earnings per share (EPS) of $4.36, beating the Zacks Consensus Estimate of $3.99. Earnings, however, declined 9% year over year due to higher R&D costs. On a constant currency basis, earnings were flat.
Sales came in at $2.53 billion, up 1% on a reported basis (3% on a constant-currency basis) from the year-ago quarter, as lower sales of multiple sclerosis (MS) drugs like Tecfidera and Tysabri were partially offset by improved revenues from spinal muscular atrophy drug, Spinraza. Sales beat the Zacks Consensus Estimate of $2.39 billion.
Product sales in the quarter were $1.81 billion, down 8% year over year. Revenues from anti-CD20 therapeutic programs rose 1% to $421.0 million. The revenues include royalties on sales of Roche’s (RHHBY - Free Report) Ocrevus and Biogen’s share of Roche’s drugs, Rituxan, Gazyva and Lunsumio. Contract manufacturing and royalty revenues rose 135% in the quarter to $304.0 million. Contract manufacturing and royalty revenues include Biogen’s 50% share of revenues (including royalties) from the Leqembi collaboration with Eisai and revenues from the manufacturing of Leqembi. Eisai recorded $2 million in sales from the new Alzheimer's drug, Leqembi, in the third quarter.
Leqembi gained full approval from the FDA for early Alzheimer’s disease in the United States and broad reimbursement from the Centers for Medicare & Medicaid Services (CMS) in July. Regulatory applications seeking approval of Leqembi are under review in China and Europe, and some other countries, while it was approved in Japan in September.
Multiple Sclerosis Revenues
Biogen’s MS revenues were $1.16 billion in the reporter quarter, down 14% on a reported basis and 12% on a constant currency basis year over year.
Tecfidera sales declined 29.4% to $239.5 million as multiple generic versions of the drug have been launched in the United States and new generic launches are ongoing in several EU countries. Tecfidera sales missed the Zacks Consensus Estimate of $245 million.
Vumerity recorded $165.5 million in sales, up 20%. Vumerity sales beat the Zacks Consensus Estimate of $157.0 million and our model estimate of $160.6 million.
Tysabri sales declined 9.7% year over year to $456.3 million, which missed the Zacks Consensus Estimate as well as our estimate of $474 million and $475.1 million, respectively. Tysabri sales are being hurt by increased competition and higher discounts.
Combined interferon revenues (Avonex and Plegridy) in the quarter were $277.7 million, down 17.4%, hurt by a continued shift from the injectable platform to oral or high-efficacy therapies.
Other Products
Sales of Spinraza rose 4% on a reported basis and 7% on a constant currency basis to $448.2 million. Spinraza sales were slightly better than the Zacks Consensus Estimate of 432 million but missed our estimate of $452.4 million.
In the quarter, biosimilar revenues rose 4% on a reported basis and 7% on a constant currency basis year over year to $194 million. A biosimilar of Roche’s Actemra called Tofidence was approved by the FDA in September.
Research and development expenses were $539.0 million, down 2% year over year. Adjusted selling, general and administrative expenses declined 2% year over year to $553.0 million, driven by the company’s cost-saving initiatives.
2023 Guidance Updated
Total revenues are expected to decline by a low-single-digit percentage in 2023 from the 2022 level. Earlier, the company expected revenues to decline by a mid-single-digit percentage.
Adjusted earnings are expected in the range of $14.50 to $15.00, down from the prior expectation of $15.00 to $16.00 per share, reflecting 75 cents dilution from the acquisition of Reata Pharmaceuticals, which closed in September. The acquisition added Reata’s newly approved rare disease drug, Skyclarys, for the treatment of Friedreich’s ataxia to Biogen’s portfolio.
Our Take
Biogen’s third-quarter results were better than expected as it beat estimates on both counts. While it raised its revenue guidance, it lowered its EPS range to include the impact of dilution from the Reata acquisition.
Biogen’s shares were up around 1% in pre-market trading due to a better-than-expected performance in the third quarter and an increase in revenue outlook.
Biogen’s stock has declined 11.2% year to date compared with a decline of 21.3% for the industry.
Image Source: Zacks Investment Research
While most of Biogen’s key drugs are facing declining sales due to intense competitive pressure, Biogen’s new products, such as Leqembi for Alzheimer’s disease, Qalsody for amyotrophic lateral sclerosis with SOD1 mutations and Zurzuvae for depression, could help revive growth. Zurzuvae (zuranolone) was approved by the FDA to treat women with postpartum depression in August and is expected to be launched by the end of 2023. Biogen believes Leqembi has the potential to generate blockbuster sales following its traditional approval and broader CMS coverage in the United States. Biogen expects sales of Leqembi to start growing from 2024.
With its focus shifting to Leqembi, Biogen announced a new restructuring program (called the Fit for Growth initiative) in July, 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 $700 million in costs by 2025.
Zacks Rank & Stocks to Consider
Biogen currently has a Zacks Rank #3 (Hold).
Biogen Inc. Price and Consensus
Biogen Inc. price-consensus-chart | Biogen Inc. Quote
Some better-ranked stocks in the healthcare sector are Dynavax Technologies Corporation (DVAX - Free Report) and MEI Pharma, Inc. (MEIP - Free Report) , sporting a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, estimates for Dynavax Technologies’ 2023 loss per share have narrowed from 24 cents to 12 cents. Meanwhile, during the same period, earnings per share estimates for 2024 have improved from 2 cents to 18 cents. Year to date, shares of DVAX have rallied 25.3%.
In the past 60 days, estimates for MEI Pharma’s 2023 loss per share have improved from $6.54 to $4.89. During the same period, loss per share estimates for 2024 have narrowed from $5.14 to $4.02. Year to date, shares of MEIP have rallied 52.7%.