Biogen (BIIB 6.19%) held a conference call in conjunction with its second-quarter earnings last week. Here are five things that management said that investors should be paying attention to.
"We had expected to see a reacceleration of Tecfidera this quarter, but that did not happen to any appreciable extent." -- George Scangos, Biogen's CEO
Last quarter, management gave a laundry list of reasons for Tecfidera's slowing sales, claiming that many of the problems were one-time issues that would go away during future quarters. But as Scangos aptly puts it, "That did not happen to any appreciable extent." Second-quarter sales of Tecfidera were only 7% higher than the first quarter, which isn't a horrible growth rate, but it's much slower than investors expected.
"We believe the safety event reported in late 2014 is creating greater caution on the part of both physicians and patients about switching to orals." -- Stuart Kingsley, Biogen's EVP of global commercial operations
Source: Biogen.
That "safety event" Kingsley mentions was a case of progressive multifocal leukoencephalopathy, or PML, which Biogen reported last October. Even with a second case reported earlier this month, the rate of PML is fairly low considering how many patients have taken Tecfidera.
But Biogen has an uphill battle convincing some doctors and patients that the benefit-risk ratio for Tecfidera is still in the drug's favor. Tecfidera can lower the level of immune cells, which allows the virus that causes PML to infect the brain, so Biogen's best bet is to convince doctors that they can lower the likelihood of PML by regularly checking immune cell counts.
"Ex-U.S. Tecfidera sales decreased 8% versus prior quarter, despite unit growth of 14%." -- Paul Clancy, Biogen's CFO
Biogen was counting on international sales of Tecfidera to make up for a maturing launch in the U.S. Selling 14% more product than the prior quarter is certainly a step in the right direction. That annualizes out to a 69% year-over-year increase, but Biogen had to take a price cut in Germany, cutting into sales growth even as Tecfidera is prescribed to more patients. International sales will continue to grow, but it'll be off a smaller base, which now sits at just 18% of total sales of Tecfidera, so it'll take quite a bit of growth to move the overall Tecfidera sales number.
"We believe that the totality of the aducanumab phase 1b study results strongly support development and registration studies." -- Douglas Williams, Biogen's EVP of research and development
A lot of time during the call was spent on aducanumab, partially because Biogen had just presented additional data at the Alzheimer's Association International Conference, or AAIC, earlier in the week but also because aducanumab has the potential to make all the turbulence with Tecfidera go away.
Alzheimer's is a multibillion-dollar market up for grabs for anyone that can develop a drug that slows the progression of the disease. The data for aducanumab so far has been generally positive, but slightly noisy given the small number of patients. The new data for a mid-range dose presented at AAIC, slotted in between the higher and lower dose for one clinical measurement of efficacy, but not for another.
Management is casting the data in the best possible light -- what else are they supposed to do? -- but investors are rightfully a little skeptical and will remain so until they see the phase 3 data.
"We have a good balance sheet. We have debt capacity. We will not be shy about using it when we see opportunities that are interesting and consistent with what we want to do. I don't think we're in any panic situation to go out and be desperate. But as we see good opportunities, we will be aggressive about bringing them in." -- Scangos
Management got three different questions about its plan for acquisitions. Scangos' responses were all pretty similar, saying Biogen is constantly looking at acquisition targets without mentioning what Biogen might be interested in buying. Investors can't really blame him for not wanting to tip off Biogen's competitors that might also want to buy the same company, but with aducanumab still years away from market -- if its phase 3 trials are even successful -- Biogen's best bet for near-term revenue growth might be to use some of the $4.5 billion it has sitting in the bank to buy some new products.
