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Biogen (BIIB) to Report Q2 Earnings: What's in the Cards?

Biogen, Inc. BIIB) will report second-quarter 2020 results on Jul 22, before market open. In the last reported quarter, the company delivered an earnings surprise of 18.09%.

The company’s performance has been pretty impressive, with earnings beating estimates in each of the trailing four quarters. The company has a four-quarter earnings surprise of 13.45%, on average.

 

Biogen Inc. Price and EPS Surprise

 

Biogen Inc. Price and EPS Surprise

 

 

 

 

 

 

 

Biogen Inc. price-eps-surprise | Biogen Inc. Quote

 

Biogen’s stock has declined 5% this year so far against an increase of 11.2% for the industry.

 

 

Factors to Consider

Second-quarter revenues are expected to have been adversely impacted by the absence of the first-quarter benefits. Notably, in the first quarter, MS revenues, excluding Ocrevus royalties, rose over year. First-quarter product sales had benefited from accelerated sales as people stocked up medicines amid coronavirus-led lockdown, primarily in Europe.

Biogen receives royalties on U.S. sales of Roche’s RHHBY newly launched MS drug, Ocrevus which is likely to have contributed to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $198 million.

Among the MS drugs, Tecfidera’s revenues are likely to have been supported by global patient growth. Sales of another MS drug, Tysabri may have risen though partly offset by impact of Ocrevus launch.

The Zacks Consensus Estimate for sales of Tecfidera is pegged at $1.11 billion while that for Tysabri is $444 million.

Vumerity, launched in the United States late in 2019, recorded sequentially lower sales in the first quarter.  It remains to be seen if sales have improved in the second quarter.

Spinraza’s new patient starts and regimen compliance may have declined in the United States in the second quarter, particularly among adults due to COVID-19. Outside the United States, the company expects a moderate impact on Spinraza’s demand due to COVID-19. The Zacks Consensus Estimate for sales of Spinraza is $518 million.

Tecfidera’s sales are unlikely to have been significantly affected due to COVID-19 in the second quarter as the majority of Tecfidera prescriptions in the United States are delivered via mail.  However, sales of Tysabri and Spinraza are expected to have been hurt by COVID-19 in the second quarter as they are administered in a physician's office or hospital setting. This means, hospitals may have delayed Tysabri and Spinraza infusions while prioritizing treatment of COVID-19 patients or patients may have chosen to delay treatment.

Interestingly, biosimilars have contributed significantly to Biogen’s top line in the past few quarters driven mainly by Imraldi’s launch, a trend that most likely continued in the second quarter.

Investors will look for updates from management on any delay in supply and manufacturing or timeline of some clinical studies due to potential disruptions from the COVID-19 pandemic when the company reports.

Key Recent Development

Earlier this month, Biogen completed submission of the biologics license application (BLA) to the FDA, seeking approval of aducanumab for Alzheimer’s disease. The completed BLA filing includes data from the ENGAGE and EMERGE phase III studies as well as the phase Ib PRIME study in patients with early-stage Alzheimer’s disease. The FDA will now decide within 60 days whether to accept the application for review and also grant its priority review status, if accepted.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Biogen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of $7.85 and the Zacks Consensus Estimate of $7.97, is -1.49%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Biogen has a Zacks Rank #3.

Stocks to Consider

Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

Sanofi SNY with an Earnings ESP of +4.15% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer PFE has an Earnings ESP of +1.04% and a Zacks Rank #3.

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