Biogen Beats, Raises View Again - Analyst Blog

Biogen Idec ( BIIB ) reported third quarter earnings per share of $1.90, well above the Zacks Consensus Estimate of $1.61 and 19.5% above the year-ago earnings of $1.59. Higher revenues boosted earnings. Third quarter 2012 revenues increased 6% to $1.385 billion. Revenues were just above the Zacks Consensus Estimate of $1.384 billion.

Including one-time items, third quarter 2012 earnings increased 16.8% to $1.67 per share.

The Quarter in Detail

Third quarter Tysabri revenues declined 1% to $275 million from the year-ago period. Tysabri revenues also declined 1.8% on a sequential basis. Global in-market net revenues of Tysabri, which is partnered with Elan Corp. , ( ELN ), came in at $404 million (up 3%) in the third quarter of 2012. Tysabri global revenues consisted of US revenues of $230 million and ROW (Rest of the World) revenues of $173 million.

On its second quarter call, Biogen had noted that it expects Tysabri sales to continue being impacted by a deferred revenue issue in Italy despite its efforts to resolve the situation.

Biogen estimates that as of the end of September 2012, about 71,100 patients were on commercial and clinical Tysabri therapy worldwide. This represents an increase from the 69,100 patients reported by the company in the second quarter of 2012.

Meanwhile, Avonex, Biogen's lead multiple sclerosis (MS) product, posted third quarter revenues of $736 million (up 8%). On a sequential basis, Avonex revenues were down 3.5%. On the second quarter call, Biogen had noted that there could be some inventory work-down for Avonex Pen as well as pre-filled syringes.

Biogen has been working on driving Avonex revenues. The company launched Avonex Pen in the US earlier this year. Avonex Pen helps improve convenient administration. The rollout of Avonex Pen in the EU and US should increase patient and physician interest in Avonex.

We note that both Avonex and Tysabri are facing additional competition in the form of Novartis' ( NVS ) Gilenya which was launched in early Oct 2010. Another recent entrant is Sanofi's ( SNY ) Aubagio.

Biogen is looking to bring BG-12, its oral MS candidate, to market in early 2013. The company reported impressive data on the candidate, which is currently under US and EU review. However, the FDA recently extended the review period for BG-12 by three months.

The extension of the FDA's review period means that a response regarding BG-12's approvability should be out in March-April 2013 instead of later this year. BG-12 could become a leader in the oral MS market once launched. The company is seeking approval in Australia, Canada, and Switzerland as well.

Rituxan revenues increased 8% to $288 million in the third quarter. Biogen and partner Roche ( RHHBY ) have been working on driving Rituxan growth by expanding the label for additional indications.

Earnings Outlook Up Again

Biogen raised its earnings guidance for 2012 again. The company now expects earnings in the range of $6.40 - $6.50 per share on mid-to-high single digit revenue growth. The company was previously expecting earnings to exceed $6.20 per share on mid-single digit revenue growth. The Zacks Consensus Estimate for 2012 currently stands at $6.46 per share.

While the company expects to spend 24% to 25% of total revenue on R&D (including a $20 - $30 million upfront payment that could be made in the fourth quarter on the signing of a discovery collaboration currently being negotiated), SG&A spend is expected to be about 22% to 23% of total revenue.

Neutral on Biogen

We currently have a Neutral recommendation on Biogen, which carries a Zacks #3 Rank (short-term Hold rating). Biogen has some important data read-outs lined up in the coming months. These include data on rFVIIIFc (hemophilia A), dexpramipexole for amyotrophic lateral sclerosis or Lou Gehrig's disease and PEGylated interferon beta-1a for multiple sclerosis.

BIOGEN IDEC INC (BIIB): Free Stock Analysis Report

ELAN CP PLC ADR (ELN): Free Stock Analysis Report

NOVARTIS AG-ADR (NVS): Free Stock Analysis Report

(RHHBY): ETF Research Reports

SANOFI-AVENTIS (SNY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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