Key Takeaways from Biogen's Q3 Call: Tecfidera, Pipeline, Biosimilars

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Biotech company, Biogen Inc.BIIB , known for its strong position in the multiple sclerosis (MS) market, reported third quarter 2016 results before the market opened yesterday with both earnings and revenues surpassing expectations (Read more: Biogen Beats on Q3 Earnings; Tecfidera Propels Sales ). Investors reacted positively to the company's results and pipeline update with shares gaining 3.7%.

Here's a look at some important takeaways from the company's third quarter conference call.

How Did the MS Franchise Perform?

The performance of Biogen's oral MS treatment, Tecfidera, has been closely watched ever since the company reported a slowdown in the product's growth rate following the emergence of the first progressive multifocal leukoencephalopathy (PML) case in a patient on Tecfidera. Since then, Biogen has been working on dispelling concerns regarding the drug's safety and on increasing awareness about the treatment. Tecfidera's third quarter sales improved on a sequential as well as year-over-year basis. However, U.S. sales benefited from an inventory build of $40 million - $50 million while ex-U.S. sales declined sequentially due to parallel trade dynamics.

Tecfidera's global market share increased by approximately 1 point from the year-ago period to 15%. In the U.S., Tecfidera continued to capture roughly half of all patients starting on an oral treatment, with current oral share of 51%. Biogen said that overall patient share remained relatively stable at 20% since the beginning of the year.

Meanwhile, Tysabri continues to add patients and increase share in the U.S. as well as emerging markets. Biogen said that with patients shifting towards high-efficacy treatments, Tysabri is benefiting from growing first-line use in the U.S. Zinbryta, a newly launched once-monthly, self-administered subcutaneous treatment for relapsing forms of MS that is partnered with AbbVie Inc. ABBV , is also benefiting from the trend towards increased use of high-efficacy products.

Pipeline Focus Increases

Biogen is focusing on its pipeline to bring in products that will drive a new wave of growth. Biogen's most promising pipeline candidate is nusinersen -- the company has finished submitting a rolling NDA for nusinersen in the U.S. where it is seeking priority review. A regulatory application has been filed in the EU as well where the candidate has been granted accelerated assessment status. Nusinersen represents significant commercial opportunity given the lack of available treatments for patients with spinal muscular atrophy, a leading genetic cause of death in infants.

Another important candidate in Biogen's pipeline is aducanumab, which is in a couple of phase III studies for Alzheimer's disease. However, this is a high risk-high reward program for Biogen. There is huge commercial potential for Alzheimer's disease treatments but quite a few companies have faced failure in this field before. Later this year, Eli Lilly and Company LLY is expected to report top-line data on solanezumab, an amyloid beta antibody like aducanumab.

Positive results on solanezumab would bode well for Biogen as this would support the amyloid hypothesis of Alzheimer's disease. However, Biogen pointed out that given the different mechanisms of action and patient population, it would be difficult to draw a conclusion of the impact of any negative solanezumab data on aducanumab.

Meanwhile, Biogen decided to discontinue the development of amiselimod, which was in-licensed from Mitsubishi Tanabe.

Biosimilars an Important Growth Opportunity

Moving on to other areas, biosimilars represent an important growth opportunity for Biogen. Revenues in Europe doubled sequentially in the third quarter with Benepali (reference product - Enbrel) picking up share rapidly and being launched in additional markets. Another biosimilar, Flixabi (reference product - Remicade) is being launched in Europe. Flixabi is available in Germany, the UK, and the Netherlands, with launch in three additional countries expected in the fourth quarter.

Bottom Line

While Biogen's third quarter results were good, the slowdown in the overall MS market in the U.S. is concerning - Biogen said that the market witnessed a 2% decline in commercial patients compared to the third quarter of 2015. With the MS market getting more crowded and growth slowing down, it makes sense for Biogen to focus on its pipeline and add assets to its product portfolio.

BIOGEN INC Price, Consensus and EPS Surprise

BIOGEN INC Price, Consensus and EPS Surprise | BIOGEN INC Quote

Biogen is a Zacks Rank #3 (Hold) stock. A better-ranked stock in the healthcare sector is Merck & Co., Inc. MRK , a Zacks Rank #2 (Buy) company. Merck has an impressive earnings track record having surpassed expectations in each of the last four quarters. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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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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