Please ensure Javascript is enabled for purposes of website accessibility

Biogen Idec Inc Earnings: Worth the Wait

By Brian Orelli, PhD - Jan 29, 2015 at 8:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Snow storms can't slow Biogen Idec's sales growth.

Biogen Idec's (BIIB 0.41%) earnings announcement was delayed because of the snow storm in Boston, but it was well worth the wait. Fourth-quarter revenue was up 34% year over year, with adjusted earnings per share 74% higher than the year-ago quarter. It's hard to complain about growth like that.

Going into the release, there was worry that growth of Tecfidera, Biogen's oral multiple sclerosis drug, was slowing down, especially in the U.S., but that doesn't really seem to be as big of a problem as investors feared.

 

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Tecfidera Sales (in millions)

$506 

$700 

$787 

$916 

Quarter-Over-Quarter Growth

27.1%

38.3%

12.4%

16.4%

Source: Company press releases.

There was one extra shipping week in the fourth quarter that helped U.S. sales; but even factoring that in, Biogen shipped $65.4 million worth of Tecfidera to U.S. customers each week in the fourth quarter compared to $60.5 million per week in the third quarter.

As you'd expect, switching from other therapies to Tecfidera has slowed down as Biogen runs out of patients looking for other treatment options -- first in the U.S., and then in Europe where it launched later -- which explains the slower growth in the latter half of the year. More importantly, Biogen hasn't seen a huge discontinuation rate of people already on therapy after a case of progressive multifocal leukoencephalopathy was revealed last quarter.

While Tecfidera has blown past Tysabri and Avonex to become Biogen Idec's most important drug, the latter two are nonetheless important given that they're still multi-billion dollar products. Avonex and its follow-on drug, Plegridy, combined for $3.1 billion in sales in 2014, up slightly from the $3 billion worth of Avonex sales in the prior year. Tysabri sales came in at $2 billion for the year, up about 18% from the prior year.

Considering the three drugs all treat the same disease, the lack of cannibalization is rather amazing. Combined, the three drugs grew 49% year over year in 2014. I don't know how many new patients were diagnosed with multiple sclerosis in 2014, but I can guarantee the number of patients didn't increase by 49%.

Biogen has some other drugs, as well, but they're a bit washed out by the big three that make up $8 billion of the company's $9.7 billion in 2014 sales. It made for a nice year, but Biogen isn't going to be able to keep the growth rate as high as it was in 2014. This year's revenue guidance is for year-over-year growth of 14% to 16%.

To get to hyper-growth again -- not that 14% growth is anything to complain about -- the company will need another megablockbuster. The most likely candidate for the job is BIIB037, an Alzheimer's disease drug that Biogen is fast tracking straight from phase 1b to phase 3 because the interim data was so good. I wouldn't pencil in revenue from BIIB037 just yet -- a lot more Alzheimer's disease drugs have failed than have succeeded -- but if the phase 3 program is successful, it's not hard to see BIIB037 being as large as the big three combined.

Brian Orelli wonders if there were a few Biogen employees regretting the closure of its San Diego facility this week. He and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Biogen Inc. Stock Quote
Biogen Inc.
BIIB
$218.20 (0.41%) $0.90

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.