Biogen Idec (BIIB) reported first-quarter earnings per share of $1.42, 3 cents above the Zacks Consensus Estimate of $1.39 and well above the year-earlier figure of $1.04. Excluding the impact of stock-based compensation expense, first quarter 2011 earnings came in at $1.43 per share.
Performance was boosted by higher mutliple sclerosis (MS) drug revenues, lower costs and lower share count. Biogen has been looking to streamline its operations and increase efficiencies through the implementation of a restructuring program. The company’s restructuring program includes initiatives like streamlining of operations, shutting down of facilities, and workforce reduction. Biogen is also focusing its development efforts on neurology and biologics.
First quarter revenues increased 9% to $1.20 billion, with MS drugs, Tysabri and Avonex being the primary growth drivers. Revenues were above the Zacks Consensus Estimate of $1.18 billion.
The Quarter in Details
First quarter Tysabri revenues came in at $251 million, up 15% from the prior-year period. Global in-market net sales of Tysabri, which is partnered with Elan Corp. (ELN), came in at $349 million (up 20%) in the first quarter of 2011. Tysabri global sales consisted of US sales of $170 million and ROW (Rest of the World) sales of $179 million.
Biogen estimates that as of the end of March 2011, about 58,400 patients were on commercial and clinical Tysabri therapy worldwide. This represents an increase from the 56,600 patients reported by the company in the fourth quarter of 2010.
With Tysabri being an important growth driver for Biogen, we remain concerned that an increase in the number of progressive multifocal leukoencephalopathy (PML) cases associated with its use could lead to a slowdown in Tysabri sales going forward.
Biogen is currently seeking approval to update Tysabri’s label so as to include anti-JC Virus antibody status as one potential factor that could help stratify the risk of PML occurring in patients treated with Tysabri. On April 18, Biogen and Elan said that the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion for including the additional risk in the Tysabri label in the EU.
Meanwhile, Biogen’s lead MS product Avonex posted first quarter sales of $642 million (up 8%). Avonex Pen recently received a positive opinion in the EU for use in patients with relapsing multiple sclerosis and patients with a single demyelinating event.
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. Results from a study comparing Gilenya with Avonex showed that Gilenya reduced relapse rates by 52% at one year compared with Avonex. Being an oral therapy, Gilenya could find quick acceptance as currently available therapies require injection or infusion.
Rituxan revenues remained flat at $256 million in the first quarter. Biogen and partner Roche (RHHBY) have been working on driving Rituxan growth by expanding the label for additional indications. In January 2011, Rituxan gained approval from the US Food and Drug Administration (FDA) as a maintenance treatment for patients with advanced follicular lymphoma who responded to initial treatment with Rituxan and chemotherapy. Rituxan recently gained approval as a combination treatment (with corticosteroids) for adults with Wegener’s granulomatosis and microscopic polyangiitis.
Revenues from other products remained flat at $13 million. Royalties also remained flat at $26 million.
Share Repurchase
During the first quarter, Biogen repurchased 2.8 million shares for about $195 million. The lower share count helped boost the bottom line. The Zacks Consensus Estimate for 2011 currently stands at $5.80.
Neutral on Biogen
We currently have a Neutral recommendation on Biogen, supported by a Zacks #3 Rank (short-term “Hold” rating). Key products, Avonex and Tysabri, should continue contributing significantly to sales. Meanwhile, the company’s restructuring initiative should help drive the bottom-line. We are also pleased with the company’s intention to streamline its pipeline development and focus on candidates that represent higher potential.
However, we remain concerned about an increase in the occurrence of PML in patients using Tysabri. Moreover, we are concerned about the launch of Gilenya which is competing directly with Avonex and Tysabri. The multiple sclerosis market could become more competitive with the entry of oral treatments being developed by Teva (TEVA) and Sanofi-Aventis (SNY).
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
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
Be the first to comment