Biogen Surges After Sales of Drug for Deadly Muscle Disease Beat EstimatesBy
New drug for deadly muscle disease had $47 million in sales
Shares rise as hopes for potential blockbuster sustained
Biogen Inc. surged the most this year as its new therapy for a rare and deadly muscle disease started strong in its first full quarter, bolstering chances the drug will become a blockbuster.
Biogen’s Spinraza, a treatment for spinal muscular atrophy, had $47 million in sales, the company said Tuesday in a statement, more than three times the $15.1 million average estimate of analysts. Spinraza will surpass the blockbuster threshold of $1 billion in annual sales in two years, analysts predict.
Spinraza is “sprinting out of the gates,” Eric Schmidt, an analyst with Cowen & Co., wrote in a note to clients. “We expect continued rapid sales growth.”
Biogen rose as much as 5.4 percent, the most intraday since Dec. 9, and was up 4.7 percent to $289.86 at 10:14 a.m. in New York.
The company’s mainstay drugs are treatments for multiple sclerosis, a group under increased threat since Roche Holding AG entered the market last month with Ocrevus. Widely hailed for its effectiveness, Ocrevus is also priced lower than many competitors. Though Biogen is entitled to a share of Ocrevus sales through a royalty agreement, analysts worry that may not be enough to make up for its loss of market share and diminished ability to raise prices.
CEO’s First Results
Ocrevus is most likely to hit sales of Biogen’s drug Tysabri, Chief Financial Officer Paul Clancy said on a conference call, and could also hurt sales of the company’s top drug, the multiple sclerosis pill Tecfidera.
Earnings excluding some items were $5.20 a share in the first quarter, Cambridge, Massachusetts-based Biogen said in the statement. That beat the average of analysts’ estimates, $4.97. Revenue was $2.8 billion, while analysts had estimated $2.73 billion.
Biogen’s multiple sclerosis drugs bested expectations for the quarter, helped by $545 million in sales of the Tysabri injection that beat analysts’ average estimate of $481 million. The company’s lead drug, Tecfidera, had $958 million in quarterly sales, missing the $979 million expected by analysts. That was driven down by about $50 million to $60 million because less drug than usual was held by distributors, the company said.
The quarterly results are Biogen’s first under new Chief Executive Officer Michel Vounatsos. The CEO has promised to boost sales by focusing on Spinraza and creating ways to keep patients on the company’s lead product, Tecfidera. He is also doubling down on the drugmaker’s focus on neurology and conducting a review of the business. Biogen said Tuesday that it will discuss results from that review in July. On the earnings call, Vounatsos emphasized Biogen’s eagerness to do more dealmaking, echoing comments that research and development head Michael Ehlers made last week.
Spinraza, developed in partnership with Ionis Pharmaceuticals Inc., has proved an unexpected windfall to Biogen, dashing from late-stage trials to U.S. approval in just a few months last year. In the more severe cases of spinal muscular atrophy, a disease in which babies lack a crucial nerve protein, the condition is a death sentence which Spinraza has been shown in many cases to avert.
Analysts had a difficult time determining how Spinraza’s first-quarter sales would look because the condition is so rare. Spinraza costs $750,000 for the first 12 months of treatment and $375,000 each year after that.
Only 25 percent of Spinraza vials dispensed so far have been through Biogen’s free drug program, according to company slides posted Tuesday, suggesting that the therapy is winning speedy reimbursement from payers.