Biogen (NASDAQ:BIIB) completed the year with a solid performance, as its new drug for spinal muscular atrophy, Spinraza, boosted revenue. Unfortunately -- but unsurprisingly -- the coming year won't see nearly as much revenue increase, as Spinraza now has comparators in the year-ago quarters.

In short, Biogen is managing its multiple sclerosis franchise as best it can, while waiting for results from Alzheimer's disease drug aducanumab, which could accelerate revenue growth again in a few years.

Biogen results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$3.31 billion

$2.87 billion


Income from operations

$1,465 million

$886 million


Earnings per share




Adjusted earnings per share




Data source: Biogen.

What happened with Biogen this quarter?

  • Sales of top-selling multiple sclerosis drug Tecfidera were up 7% year over year, with most of the growth coming from outside the U.S. Stateside, the drug is holding its own against Roche's Ocrevus, but as expected, the new competition has slowed Tecfidera's growth.
  • Sales of Tysabri also fell a little -- down 2% year over year, due to competition from Ocrevus.
  • Fortunately, Biogen gets royalties on Ocrevus as part of its partnership with Roche, which contributed $77 million of high-margin revenue.
  • Sales of Biogen's interferons Avonex and Plegridy, which also treat multiple sclerosis, slipped 6% year over year as patients moved to oral medications or higher-efficacy injectables.
  • Spinraza, an antisense drug licensed from Ionis Pharmaceuticals (NASDAQ:IONS), rounded out a stellar performance in its first year on the market with sales up 34% quarter over quarter. There are 275 sites in the U.S. that have submitted forms to start treatment with the drug, but only 215 have dosed at least one patient, so there's still plenty of potential growth left.
  • Adjusted earnings per share are definitely the best measure for comparing year-over-year profits, since there were major one-time charges in the fourth quarters of both years. These included the Tecfidera litigation settlement in 2016, and a payment to Neurimmune to reduce the royalty rate for aducanumab, as well as a charge associated with the U.S. tax reform in the most recent quarter.
Diagnostic form with "multiple sclerosis" written on it, along with a thermometer, syringe, and packs of pills

Image source: Getty Images.

What management had to say

After last quarter's debacle of trying to explain how the growth rate for Spinraza was affected by the dosing -- more dosing is required in the beginning of treatment, before the maintenance phase -- Jeff Capello, Biogen's new chief financial officer, laid out the situation clearly:

In the U.S., approximately 25% of Spinraza revenues in the fourth quarter were attributed to maintenance doses, as compared to 10% in the third quarter. This correlates with the continued decline in the average doses per patient from 1.8 to 1.5 from the third quarter to the fourth quarter this year. We expect this dynamic to normalize over time, with approximately 50% revenue being driven by maintenance doses by the end of 2018.

Michael Ehlers, head of research and development at Biogen, highlighted the number of drugs Biogen was able to bring into the clinic last year:

We made noteworthy advancements transitioning pipeline candidates from research to development, with five transitions in 2017, nearly double Biogen's historical productivity. In 2018, we aim to continue this level of productivity, or even accelerate the number of candidates that transition to the clinic.

Looking forward

Management guided for revenue of $12.7 billion to $13 billion this year, which is 3.5% to 6% higher than last year. The company is basically looking for flat sales from its multiple sclerosis franchise, including royalties on Ocrevus, which leaves the other drugs -- mostly Spinraza -- to drive growth.

On the bottom line, management expects adjusted earnings per share to fall between $24.20 and $25.20, or 11% to 15.5% higher than last year. Profits are expected to grow faster than revenue because of a 200-basis-point lower tax rate due to U.S. tax reform, as well as lower research and development expenses as a percentage of revenue.

Looking further ahead, 2019 could see the approval of BIIB098, a multiple sclerosis drug Biogen licensed from Alkermes.

And further down the road -- but much more important to Biogen's long-term success, considering its multibillion-dollar potential -- phase 3 trials for the aforementioned Alzheimer's disease drug aducanumab should be fully enrolled in the middle of this year, setting up a readout in the late 2019 or early 2020 time frame.

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