Why Biogen’s Alzheimer’s Study Is Overshadowing Its Big Earnings Beat

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Biogen Inc. (NASDAQ: BIIB) released its third-quarter financial results before the markets opened on Tuesday. The biotech giant posted $9.17 in earnings per share (EPS) and $3.60 billion in revenue. The consensus estimates had called for $8.27 in EPS and $3.54 billion in revenue, and in the same period of last year, $7.40 in EPS and $3.44 billion in revenue were posted.

Multiple sclerosis revenues in the latest period, including $188 million in royalties on the sales of Ocrevus, increased 2% year over year to $2.35 billion.

At the same time, revenue growth was driven in part by the continued global launch of Spinraza, which contributed $547 million in revenues.

Biosimilars revenues, primarily driven by Imraldi, increased to $184 million compared to $135 million in the second quarter of 2018.

Perhaps the driving force for the stock was Biogen’s announcement that after consulting with the U.S. Food and Drug Administration (FDA), Biogen plans to pursue regulatory approval for aducanumab, an investigational treatment for early Alzheimer’s disease. The Phase 3 Emerge study met its primary endpoint showing a significant reduction in clinical decline, and Biogen believes that results from a subset of patients in the Phase 3 Engage study who received sufficient exposure to high dose aducanumab support the findings from Emerge.

Patients who received aducanumab experienced significant benefits on measures of cognition and function such as memory, orientation and language. Patients also experienced benefits on activities of daily living, including conducting personal finances; performing household chores such as cleaning, shopping and doing laundry; and independently traveling out of the home. If approved, aducanumab would become the first therapy to reduce the clinical decline of Alzheimer’s disease and would also be the first therapy to demonstrate that removing amyloid beta resulted in better clinical outcomes.

Michel Vounatsos, Biogen’s CEO, commented:

Biogen delivered solid performance in the third quarter driven by continued resilience from our MS core business and growth from Spinraza and biosimilars. Spinraza continued on a strong trajectory, particularly outside the U.S., and we are preparing for the expected launch of Vumerity, which we believe will be an important addition to our market-leading multiple sclerosis portfolio. In addition to the recent news on aducanumab, we made strong progress in our pipeline as we initiated new clinical programs targeting Parkinson’s disease and brain contusion, and we look forward to nine important data readouts by the end of next year. We continue to believe that our core focus on neuroscience will lead to new innovative treatments for patients and will maximize long-term returns for our shareholders.

Shares of Biogen traded up about 36% to $303.37 on Tuesday, in a 52-week range of $215.78 to $344.00. The consensus price target is $252.69.


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