Biogen Inc. Slows (But Let's Keep This in Perspective)

Biogen (BIIB -0.85%) released earning last Wednesday. Here's a summary of how the fourth quarter went for the biotech.

Biogen results: The raw numbers

What happened with Biogen this quarter?

• All eyes remain on Biogen's top-selling multiple sclerosis drug, Tecfidera, which continued to see growth moderate. Overall sales were up 6% quarter over quarter, including a 4% increase in the U.S., but the stateside growth was almost entirely due to changes in inventory.
• Sales of interferons to treat multiple sclerosis -- Avonex and Plegridy -- fell 4.8% year over year. Some, but not all, of that had to do with fewer shipping weeks for U.S. sales in the fourth quarter of 2015 compared to the year-ago quarter. A small decline isn't all that unexpected since the oral medications, including Tecfidera, are taking market share from the injected drugs. Biogen is well set up to retain whatever patients want to remain on an interfereon because Plregridy is injected less often; Plregridy sales actually more than doubled year over year, although it couldn't make up for the decline in Avonex sales.
• Sales of Tysabri were essentially flat year over year in the fourth quarter, but the issue seems to be international sales that were hurt by the stronger dollar. In the U.S., sales of Tysabri were up 4.5%.
• Sales of Biogen's new hemophilia drugs -- Alprolix and Eloctate -- continued to grow, but their combined $172 million in revenue doesn't move the $2.8 billion overall revenue needle that much. Management said Alprolix growth is likely to stall given the penetration it's made already. Sales Eloctate, which treats a different form of hemophilia that's a larger market, will continue to grow.
• Earnings per share were hurt by a restructuring charge associated with the company's announcement in October to downsize and terminate a few pipeline projects. Adjusted earnings per share in the fourth quarter were up 10% year over year.

What management had to say
Reaccelerating sales of Tecfidera is key to short-term growth, but Paul Clancy, Biogen's CFO, wasn't making any promises for increases in the U.S. "While we're hopeful our recently launched marketing campaign can reaccelerate growth, we remain cautious, as we believe we will not ascertain the impact until the second quarter of this year," Clancy said. Europe should see growth with the pricing worked out and patient demand still increasing since Tecfidera launched later there.

While the downturn in the biotech sector has hurt Biogen's stock, acquisitions and licensing deals to add drugs to Biogen's pipeline become more attractive. "And as it gets more difficult and less attractive to raise money from the financial markets, obviously other alternatives become more attractive. And we hope that -- and we believe that will all move in the favor of companies like us who are out to in-license or acquire additional compounds," CEO George Scangos said.

Looking forward
While investors lament Biogen's slower growth -- 2016 revenue guidance is for growth between about 3% and 5% -- the company has opportunities in its pipeline to accelerate growth.

A phase 2 trial called SYNERGY for Biogen's anti-LINGO antibody, which is designed to treat multiple sclerosis at the source of the damage rather than inhibiting the immune system from doing the damage, will read out in the middle of this year.

Two phase 3 trials testing nusinersen, which Biogen licensed from Ionis Pharmaceuticals (IONS -0.24%), are expected to read out in the first half of next year. The drug treats spinal muscular atrophy, which has no approved treatments, so there's a possibility that the drug could get on the market based on phase 2 data. Management at both Biogen and Ionis Pharmaceuticals have downplayed investors hopes although Biogen's chief medical officer Alfred Sandrock noted on the call that the company was "meeting frequently" with regulators to make the drug available "as rapidly as possible."

And more long term, there's aducanumab, which is in two phase 3 trials to treat Alzheimer's disease, a potentially very large market. These are large trials, so they'll take some time to enroll and the company hasn't disclosed an estimate when the trials will be completed.