Biogen Profits Up in 2019 Despite Aducanumab Drama

 

It’s been a roller-coaster year for Biogen. In March, after announcing it and Tokyo-based Eisai were discontinuing their global Phase III trials, ENGAGE and EMERGE, of aducanumab in Alzheimer’s, shares plunged, losing $18 billion in value in one day. Then, a few months later, the company announced that further analysis of the data showed cognitive improvement and discussions with the U.S. Food and Drug Administration (FDA) encouraged them to submit the drug for approval.

The company reported its full year and fourth-quarter 2019 financial results today, citing full-year total revenues of $14.378 billion, an increase of 7% from the previous year. It was driven by growth in its core business areas. Its multiple sclerosis (MS) revenues increased 2% from 2018 to $9.217 billion, which included $688 million in royalties on the sale of Ocrevus. Its drug for spinal muscular atrophy (SMA) rose 22% from 2018 to $2.097 billion. And the overall biosimilars revenue grew 35% to $738 million.

Even with the stock issue in March, full-year GAAP net income and diluted earnings per share (EPS) were $5.889 billion and $31.42, respectively, compared to $4.431 billion and $21.58 from 2018.

“In 2019 Biogen demonstrated strong execution across all of our core business areas with resilience in MS, continued strong worldwide growth for Spinraza, and an expanded biosimilars business,” noted Michel Vounatsos, Biogen’s chief executive officer. “In addition, as part of our expanded pipeline, we are excited about the prospects for aducanumab in Alzheimer’s disease and look forward to completing a regulatory filing in the U.S. as soon as possible.”

Biogen projects 2020 full-year adjusted profit to be about $31.50 per share to $33.50 per share, with analysts on average predicting $33.03 per share. Investors can expect some volatility related to the submissions related to aducanumab.

Two days ago, Sumant Kulkarni, an analyst with Cannacord Genuity, noted that although experts had mixed opinions on whether the FDA will eventually approve aducanumab, many skeptics think it has a “decent shot,” and that isn’t reflected in the current share price. “This stock call is based less on an opinion about the merits (or lack thereof) of the science/data,” he wrote. “We cannot, however, underestimate investors’ fear of missing out on the potential to get ahead of what might be an approval for the first ever disease-altering therapy for Alzheimer’s.”

As a result, he upgraded Biogen to Buy from Hold with a price target of $360, up from $305. Today the stock is currently priced at $282.52.

Although most of the attention to Biogen’s pipeline is focused on aducanumab, Vounatsos in the annual report noted, “Our pipeline has grown and is maturing, as we added seven new clinical programs in 2019 and expect 11 mid- to late-stage data readouts by the end of 2021. We look forward to multiple near-term opportunities for value creation, including in Alzheimer’s disease, ALS, stroke, lupus, ophthalmology, and biosimilars, as we aim to build a multi-franchise portfolio. Across all areas of investment, we remain focused on diligent capital allocation to maximize returns for our shareholders over the long term.”

The seven products include BIIB111 for choroideremia, BIIB112 for X-linked retinitis pigmentosa, BIIB091 for MS, BIIB094 for Parkinson’s disease, BIIB100 for ALS, BIIB093 for brain contusion, and SB11, a biosimilar to Lucentis.