Biogen (NASDAQ:BIIB) put up solid double-digit revenue growth in the second quarter, with earnings growing even faster. But investors rightfully continue to worry about the future when year-over-year comparisons for its current growth driver, recently launched Spinraza, start to get tougher.

Biogen results: The raw numbers


Q3 2018

Q3 2017

Year-Over-Year Change


$3.44 billion

$3.36 billion


Income from operations

$1.70 billion

$1.65 billion






Adjusted EPS




Data source: Biogen. EPS = earnings per share.

What happened with Biogen this quarter?

  • Sales of multiple sclerosis (MS) drugs plus royalties Biogen receives on Roche's MS drug Ocrevus, which all told make up more than two-thirds of total revenue, were flat year over year. Sales of top-selling Tecfidera were up 2%, boosted by a 6% increase outside the U.S. Tysabri sales were relatively stable in the U.S. due to competition with Ocrevus, but that's better than the 18% year-over-year decline in the first quarter and the 8% drop in the second quarter. The culprit keeping the MS overall sales from growing continues to be Biogen's interferon drugs -- Avonex and Plegridy -- which were collectively down 11% as patients continue to switch over to oral medications or the more robust biologics.
  • Overall revenue was really boosted by Spinraza, the spinal muscular atrophy (SMA) drug licensed from Ionis Pharmaceuticals (NASDAQ:IONS), which saw sales grow 73% year over year. The company continues to capture adult patients, which made up more than half of the new patients added during the quarter. Launches outside the U.S. continue to drive sales; Biogen added four more countries with formal reimbursement policies, bringing the total to 28 markets.
  • Sales of biosimilars were up 35% year over year, but they're building off a small base and still only up to $135 million. Growth should continue with the recent launch of Imraldi, a biosimilar of Humira. Biogen recently upped its stake in its Samsung Bioepis joint venture, which should close by the end of this year.
  • Yesterday, Biogen and partner UCB said their drug dapirolizumab pegol failed to show a statistically significant improvement in patients with lupus in a phase 2b study. The companies noted that patients did improve compared to placebo, but the difference wasn't statistically significant. Without seeing the data, which wasn't released, it's hard to know what the companies will do, but they could theoretically run a larger trial where the same magnitude of difference between patients treated with drug and placebo would be statistically significant.
  • The company generated $1.7 billion in free cash flow during the quarter, which should help fund additional business development deals as well as share repurchases up to another $3.5 billion that the board authorized recently.
Adult hands touching a baby's foot

Image source: Getty Images.

What management had to say

While sales of Spinraza continue to climb, it appears there are plenty of patients still left to capture, according to Biogen CFO Jeffrey Capello:

In the U.S., we estimate we now have reached approximately 50% of all infants and pediatric patients, and we estimate we've reached approximately 15% of adults, an increase from approximately 10% in the second quarter. We estimate that about a third of our US patients on therapy are now adults.

As a reminder, our data indicate that approximately 5% of the prevalent estimated population are infants, 35% are pediatric patients and 60% are adults, highlighting the large number of untreated adult patients that we believe could benefit from Spinraza.

Roche and PTC Therapeutics (NASDAQ:PTCT) have a competing SMA drug, risdiplam, which posted promising data in June, but Michael Ehlers, Biogen's executive vice president, research and development, pointed out that Spinraza has a solid head start:

We follow other programs and experimental therapeutics in development. We are aware of the data that Roche and PTC have presented around their oral compound. We know that the field is very interested in the long term safety and tolerability of that compound as are we. I would say that our -- the most recent NURTURE data that I mentioned really highlights the compelling efficacy profile of Spinraza. And when we look across just the clinical experience today, I would remind that while we're very interested in -- I think, it's roughly 21 Type 1, 35 Type 2, Type 3 patients in the Roche/PTC study. We had nearly 6,000 patients for close to -- up to six years, in some instances, of patients on Spinraza. So we have the largest body of clinical evidence for any SMA therapy.

Looking forward

Biogen has quite a few drugs in the pipeline -- 15 new clinical programs have been added since the beginning of 2017 -- many of which could be the next Spinraza, driving growth in the years ahead. But Biogen's biggest opportunity is clearly in Alzheimer's disease, given the unmet need and growing elderly population.

While the phase 3 data for aducanumab won't be available for a while, investors will get data tomorrow on Friday from the clinical trials on Alzheimer's disease conference where Biogen and its partner Eisai will present early-stage data on aducanumab as well as BAN2401 and elenbecestat, two additional Alzheimer's disease drugs that are in phase 2 development.

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