Zacks Investment Research | Jan 21, 2019 07:15AM ET
Biogen Inc. (NASDAQ:BIIB) will report fourth-quarter and full-year 2018 results on Jan 29, before market open. Last quarter, the company delivered a positive earnings surprise of 8.82%.
Biogen’s shares declined 2.9% in the past year compared with the industry ’s decline of 21.3% in the same time frame.
Biogen’s earnings performance has been decent so far. The company delivered a positive surprise in three of the last four quarters. The average earnings beat over the last four quarters is 4.66%.
Factors to Consider
The performance of Biogen’s multiple sclerosis (MS) drugs has been stable lately. Tecfidera U.S. revenues improved in the third quarter. Meanwhile, ex-U.S. sales were strong driven by patient growth across European markets, solid emerging market growth and particularly strong performance in Japan, which offset the impact of ongoing price decreases in certain European countries.
U.S. sales of another MS drug, Tysabri have been hurt by Roche’s (OTC:RHHBY) newly launched MS drug, Ocrevus. Meanwhile, patient growth in all major European markets and solid emerging market growth is pushing up Tysabri’s sales in ex-U.S. markets.
In the fourth quarter, Biogen expects worldwide MS product revenues to be stable from the year-ago period, benefiting from a moderate inventory channel build and less significant impact of Ocrevus on a year-over-year basis.
The Zacks Consensus Estimate for sales of Tecfidera in the fourth quarter is pegged at $1.10 billion while that for Tysabri (Global In-Market sales) is $452 million.
The combined number of patients using Avonex and Plegridy is expected to decline due to a shift to other oral MS therapies as well as higher discounts and allowance.
Biogen’s new drug, Spinraza, approved for spinal muscular atrophy, performed well in the past two quarters. On the Q3 call, management was optimistic that Spinraza patient starts will grow in the United States in future quarters as it continues to capture the adult segment, which represents approximately 60% of all SMA patients. It had until then penetrated only 15% of the adult segment. Thus, this segment represents presents strong growth opportunity. In ex-U.S. markets, Spinraza’s uptake in the fourth quarter is expected to be driven by continued patient growth, although at a more modest rate in mature markets.
Biosimilars sales in the third quarter rose both year over year and sequentially. Biogen markets two biosimilar products — Flixabi (a biosimilar referencing Remicade) and Benepali (a biosimilar referencing Enbrel). In the fourth quarter, Biogen expects relatively stable biosimilars revenues compared to the third quarter. Importantly, in October, Biogen launched Imraldi, its biosimilar version of AbbVie’s blockbuster drug, Humira in several European markets. This should bring in additional sales in Q4.
Revenues from Biogen’s anti-CD20 therapeutic programs, which include Biogen’s shares of Rituxan and Gazyva operating profits, contributed significantly to the top line in the past two quarters primarily driven by Ocrevus royalties. We expect the positive trend to continue.
Overall, on the Q3 call, management had said that the fourth quarter of 2018 will face difficult comparisons from the prior-year quarter as the latter had benefited from favorable timing of contract manufacturing.
Both R&D and SG&A expenses are expected to sequentially increase in the fourth quarter due to the timing of clinical trial expense and market expansion investments as well as seasonality.
Earnings Whispers
Our proven model does not conclusively show that Biogen is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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