Earnings Miss for Biogen - Analyst Blog
Biogen Idec ( BIIB ) reported first quarter earnings per share of $1.39, below the Zacks Consensus Estimate of $1.44 and the year-ago earnings of $1.42. Results were affected by higher costs.
First quarter 2012 revenues, which were in-line with the Zacks Consensus Estimate, increased 7% to $1.3 billion.
Including one-time items, first quarter 2012 earnings increased 4.2% to $1.25 per share.
The Quarter in Detail
First quarter Tysabri revenues came in at $286 million, up 14% from the prior-year period. Global in-market net revenues of Tysabri, which is partnered with Elan Corp. ( ELN ), came in at $399 million (up 14%) in the first quarter of 2012. Tysabri global revenues consisted of US revenues of $201 million and ROW (Rest of the World) revenues of $198 million.
Biogen estimates that as of the end of March 2012, about 66,600 patients were on commercial and clinical Tysabri therapy worldwide. This represents an increase from the 64,400 patients reported by the company in the fourth quarter of 2011.
Tysabri's label was updated so as to include anti-JC virus antibody status as one potential factor that could help stratify the risk of progressive multifocal leukoencephalopathy ( PML ) occurring in patients treated with Tysabri. The company is now in a position to approach neurologists and provide the MS community with more confidence when considering treatment options.
Meanwhile, Biogen's lead MS product Avonex posted first quarter revenues of $662 million (up 3%). However, unfavorable distribution channel dynamics impacted Avonex's global unit demand by 4%.
Biogen has been working on driving Avonex revenues. The company recently launched Avonex pen in the US. The availability of Avonex Pen should help 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.
However, Biogen is looking to bring BG-12, its oral MS candidate, to market in early 2012. The company reported impressive data on the candidate which has been filed for US and EU marketing approval. BG-12 could become a leader in the oral MS market once launched.
Rituxan revenues increased 11% to $285 million in the first quarter. Biogen and partner Roche ( RHHBY ) have been working on driving Rituxan growth by expanding the label for additional indications.
First quarter Fampyra revenues were $15 million, up from $10 million in the fourth quarter of 2011.
2012 Outlook Revised
Biogen updated some components of its outlook for 2012. The company earnings to exceed $6.15 per share on mid-single digit revenue growth. The company was previously expecting earnings of $6.10 - $6.20 per share on low to mid-single digit revenue growth. The Zacks Consensus Estimate currently stands at $6.12 per share.
While the company expects to spend 24% to 25% of total revenue on R&D, SG&A spend is expected to be about 22% to 23% of total revenue. As the company prepares for the potential launch of BG-12 in early 2013, Biogen is investing in product positioning, promotional planning, scientific outreach, patient support services and supply chain.
Biogen is also preparing for the launch of its hemophilia products, potentially in 2013. With the company having no prior experience in the hemophilia market, Biogen has in place a commercial team consisting of professionals with significant experience in the hemophilia space. The team will be built further as the launch date approaches.
Biogen intends to repurchase an additional $500 million in shares in 2012.
Neutral on Biogen
We currently have a Neutral recommendation on Biogen, which carries a Zacks #3 Rank (short-term Hold rating). Key products, Avonex and Tysabri, should continue contributing significantly to revenues. BG-12 should help drive long-term growth.