Biogen president and CEO Christopher A. Viehbacher

Investors and analysts are so used to bad news from Biogen (BIIB) that they seemingly didn’t know how to react when the biotech giant delivered more upbeat—or at least less downbeat—first-quarter results than expected.

Biogen finished the first quarter with net income of $393.4 million, up 1.4% from $387.9 million in Q1 2023, despite a 7% drop in revenue to $2.291 billion from $2.464 billion a year ago. The company’s GAAP diluted earnings per share (EPS) rose year-over-year, albeit by just 1%, to $2.70 from $2.67 (non-GAAP EPS, which excludes nonrecurring items, rose 8%, from $3.40 to $3.67).

“This is the first time in several years that the underlying business performance of Biogen has allowed us to actually demonstrate earnings per share growth, and that’s a major achievement,” Biogen president and CEO Christopher A. Viehbacher told analysts on the company’s quarterly earnings call. “We’ve clearly still got a lot of work to do, but I think it feels like we’re turning the corner in the company.

Biogen said its cost-cutting efforts carried out last year have begun to bear fruit, though the company’s top-selling multiple sclerosis drugs lost revenue to competition from less expensive generics.

More encouraging, however, was that the sales of three recently approved drugs surpassed analyst forecasts. The Alzheimer’s drug Leqembi® (lecanumab), which Biogen co-developed with Eisai, recorded global in-market sales of approximately $19 million, nearly double the $10 million generated in all of 2023, while the number of patients on therapy increased nearly 2.5 times since the end of 2023, Viehbacher said. While he furnished no figures, Eisai said in February that 2,000 U.S. patients were on Leqembi as of January 26 and about another 8,000 were on a waiting list.

“1Q24 earnings showed the first signs of hope for a change in the slope of Leqembi’s launch curve as physicians and institutions have refined their processes for getting patients from diagnosis to infusion,” Brian P. Skorney, a senior research analyst with Baird, wrote in a research note. “We think this could set up a subsequent strong 2Q as the patient floodgates start opening.”

Biogen’s Skyclarys® (omaveloxolone), a treatment for Friedreich ataxia patients ages 16+, fared even better, racking up $78 million in global revenue. “As of April 19, we now have over 1,100 patients on therapy. With an estimated 4,500 addressable Friedreich’s ataxia patients in the United States, we have achieved 24% market penetration,” Alisha Alaimo, Biogen’s president, head of North America, told analysts.

Another recent approval, Zurzuvae™ (zuranolone), which won FDA approval for postpartum depression in adults—but not for the larger market of adults with major depressive disorder—generated approximately $12 million. Biogen co-developed Zurzuvae with Sage Therapeutics.

Beating analyst forecasts

Those numbers beat analyst forecasts compiled by FactSet and reported by CNBC of $11 million for Leqembi, $68.8 million for Skyclarys, and $5 million for Zurzuvae.

Analysts following Biogen acknowledged the company’s positive results for Leqembi and Skyclarys. So too, to a lesser degree, did investors, as Biogen shares rose almost 5% Wednesday once it released its Q1 results, from $193.18 to $201.99. Biogen shares inched up another nearly 4% the rest of this past week to $209.79 in Friday afternoon trading as of 3:02 p.m. That still represents a 27% plunge from Biogen’s stock price of $288.04 a year ago on April 26, 2023.

“Sentiment is still low in the big picture, but might not be as bad as investors think and there is nice progress w/ other launches despite Leqmebi being slow,” Jefferies biotech equity analyst Michael J. Yee commented in a research note. “We think [the] stock should recover if these launches pick up in H2/24 on a backdrop of already low expectations.”

Also on the positive side, a quartet of Leerink Partners analysts led by Marc Goodman, senior managing director, neuroscience and a senior research analyst with Leerink Partners, noted that Leqembi and Skyclarys performed about in line with their expectations, while Viehbacher and other Biogen executives expressed optimism that the treatments will continue to see increases in new patient starts and sales.

“Given how low investor expectations have gotten on [Biogen’s] name, 1Q24 was pretty good news,” Goodman and colleagues observed in a research note. “We are not surprised by the stock bump of 5% in a flattish to slightly down biotech environment, as the business has somewhat stabilized, Skyclarys was OK, and Leqembi is seeing an inflection point.”

Awaiting data readouts

Goodman said he is awaiting clinical data readouts on four pipeline candidates expected at mid-year:

  • Dapirolizumab pegol (BIIB133)—Phase III data in systemic lupus erythematosus (SLE). Biogen and UCB are partnering to develop the drug, now being assessed in NCT04294667 and extension study NCT04976322.
  • BIIB124/SAGE324—Phase IIb data in essential tremor; Biogen and Sage Therapeutics are partnering to develop the drug, now being assessed in NCT05173012 and long-term safety and tolerability study NCT05366751.
  • BIIB105—Data from the Phase I/II ALSpire trial (NCT04494256) in participants with the ALS Ataxin-2 (ATXN2) genetic mutation and broad amyotrophic lateral sclerosis (ALS).
  • BIIB121—Data from the Phase Ib portion of the Phase I/II HALOS trial (NCT05127226) in Angelman syndrome. Biogen has an option to acquire an exclusive license from Ionis Pharmaceuticals, with which it is partnering to develop the drug.

Also positive on Biogen was Sumant Kulkarni, a managing director covering biotechnology stocks with Canaccord Genuity. “There were no major surprises for us in the quarter, and we are encouraged by signs of solid execution,” Kulkarni wrote in a research note.

Kulkarni raised Canaccord Genuity’s 12-month price target on Biogen shares 1%, from $305 to $308, and reiterated his firm’s “Buy” rating on the stock. “We would not be surprised if eventual 2024E EPS exceeds BIIB‘s current outlook range of $15–16,” he added.

Sales erosion

On the downside, Biogen continued to see erosion in sales of its leading drugs, namely the six treatments that comprise its multiple sclerosis (MS) franchise. Product revenue for the MS franchise slid 4% year-over-year, to $1.076 billion from $1.125 billion in the year-ago quarter.

Nearly half of those sales come from Biogen’s top-selling MS drug Tysabri® (natalizumab), which saw its product revenue fall 9% to $431.3 million from $472.8 million in Q1 2023. Tysabri saw its first biosimilar rival win FDA approval in August 2023—Tyruko® (natalizumab-sztn), marketed by Sandoz, which spun off from Novartis last October.

Outside of MS, another underperformer for Biogen during the first quarter was the spinal muscular atrophy treatment Spinraza® (nusinersen), which saw its net product revenue tumble 23%, to $341.3 million from $443.3 million in the first three months of 2023. The Q1 2024 sales fell 18% short of FactSet’s $415.1 million estimate and 21% below the $430 million estimate of William Blair analysts Myles R. Minter, PhD, and Sarah Schram, PhD.

Minter and Schram noted that Biogen has projected a full-year 2024 decline in revenue vs. 2023 by low- to mid-single digits. That would translate to about $9.4 billion, vs. the William Blair analysts’ current estimate of $9.39 billion and FactSet’s projected $9.47 billion.

“With shares down roughly 25% year-to-date prior to [Wednesday’s] update, we believe even modest signs of growth are enough to swing investor sentiment in the beaten-up name,” Minter and Schram wrote. They added that Biogen still has $4–5 billion available for future mergers and acquisitions (M&A) deals for further inorganic growth, and still generates about $3 billion in earnings before interest taxes, depreciation, and amortization (EBITDA) per year.

Also optimistic on Biogen was Wedbush Securities analyst Laura Chico, who raised her firm’s price target on Biogen 1%, from $213 to $215, while keeping its “Neutral” rating on the stock.

Cutting price targets

Not all analysts share the optimism on Biogen shown by Minter and Schram, Yee, Goodman, and Kulkarni. Three analysts lowered their price targets on Biogen shares, albeit only by single digits:

  • Andrew Fein (H.C. Wainwright)—Down 8%, from $325 to $300, but maintaining the firm’s “Buy” rating.
  • Carter Gould (Barclays)—Down 7%, from $215 to $200, but maintaining the firm’s “Equal Weight” rating.
  • Srikripa Devarakonda (Truist Financial)—Down 1% from $344 to $340, but maintaining the firm’s “Buy” rating.

Kulkarni cautioned that in the near- to mid-term, three factors will be key to how well Biogen shares perform: 1) the Skyclarys and Zurzuvae launches, plus a potential inflection on Leqembi; 2) continued defense of its sales position for the rest of Biogen’s product base, including Spinraza and the MS franchise, “which appear to be holding up well”; and 3) further cost optimization.

Over the past near-year, Biogen has been carrying out cost cutting—including the elimination of approximately 1,000 jobs—through its “Fit for Growth” initiative, which the company had projected will generate approximately $1 billion in gross operating expense savings by 2025.

Biogen said “Fit for Growth” was on track to deliver that $1 billion in savings—and ultimately, approximately $800 million in net operating expense savings by 2025, up from the $700 million net initially projected by the company. That means only about $200 million will be reinvested into product launches and R&D programs, compared with the $300 million projected last year.

Michael McDonnell, Biogen executive vice president and CFO, told analysts on the earnings call that while Spinraza’s U.S. revenue was up 1% year-over-year, the drug was hurt by a 35% decline in revenue outside the United States.

“The majority of this year-over-year decline was due to shipment timing in certain emerging markets,” McDonnell explained. “We continue to generally see stable patient numbers globally, and we would expect the shipping dynamic outside the U.S. to largely normalize throughout the remainder of 2024. We also saw some modest negative impacts from competition and foreign exchange in the quarter.”

As a result, McDonnell said, “We expect global Spinraza revenue to decline by a low-single-digit percentage” for the full year 2024.

Leaders and laggards

  • Biodexa Pharmaceuticals (BDRX) shares rocketed 74% from $0.72 to $1.25 Friday, after the company said it signed an exclusive license with Rapamycin Holdings (Emtora Biosciences) for worldwide rights to “develop, manufacture, commercialize, and otherwise advance the clinical potential of” eRapa, a Phase III-ready drug candidate designed to treat familial adenomatous polyposis (FAP). Biodexa’s Phase III FAP program will be funded by a $17 million grant from the Cancer Prevention and Research Institute of Texas (CPRIT), a $6 billion, 20-year initiative approved by Texas voters to fund cancer-related research, product development, and prevention efforts. Biodexa said Phase II results for eRapa in FAP will be presented at two “leading” scientific conferences in Q2.
  • Cidara Therapeutics (CDTX) shares tumbled 25% from $13.62 to $10.25 between April 22 and Tuesday, before bouncing back 20% on Wednesday, to $12.29, after reacquiring global rights from Janssen Pharmaceuticals (Johnson & Johnson) to CD388, which is in development for the prevention of all strains of influenza A and B, and completing a $240 million private placement financing led by RA Capital Management with “significant” participation by Bain. Cidara began the week acknowledging receipt of a delinquency notice from Nasdaq because it was late filing its Form 10-K Annual Report for the fiscal year ended December 31, 2023, with the U.S. Securities and Exchange Commission (SEC). Cidara filed the Form 10-K on April 22. Earlier, Cidara said it needed more time to account for indirect taxes, and related interest and penalties, in various ex-U.S. tax jurisdictions based on its supply chain activities in 2023 and prior years.
  • Nvidia (NVDA) shares climbed 15% this past week from $762 on April 19 to $877.76 on Friday, capping a week marked by the company’s acquisition of Tel Aviv-based Run:ai, a provider of workload management and orchestration software based on the Kubernetes open-source system, for a price reported by Globes to be between $680 million to $720 million. Nvidia, which is expanding its presence in the life sciences, said Run:ai customers—including “some of the world’s largest enterprises across multiple industries”—use the company’s platform to manage data-center-scale graphic processing unit (GPU) clusters. During the pandemic, Run:ai helped the London Medical Imaging & Artificial Intelligence Centre for Value-Based Healthcare (AI Centre) manage AI resources as it developed a COVID-19 diagnostic tool. “Run:ai has been a close collaborator with NVIDIA since 2020 and we share a passion for helping our customers make the most of their infrastructure,” Omri Geller, Run:ai cofounder and CEO, said in a statement.
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