We expect
Biogen, Inc.
BIIB
to beat expectations when it reports fourth-quarter and full-year 2021 results on Feb 3, before market open. In the last reported quarter, the company delivered an earnings surprise of 14.94%.
The company’s earnings beat estimates in three of the last four quarters while missing in one. The company has a four-quarter earnings surprise of 9.42%, on average.
Biogen’s stock has declined 19.2% this year so far compared with a decrease of 38.3% for the
industry
.
Image Source: Zacks Investment Research
Factors to Consider
Biogen’s sales in the fourth quarter are likely to have been hurt by lower sales of Tecfidera and Spinraza.
Biogen’s multiple sclerosis revenues, excluding Ocrevus royalties, have been declining since the past few quarters. It is unlikely that MS sales will have improved in the fourth quarter.
Among Biogen’s MS drugs, sales of Tecfidera are likely to have declined steeply hurt by the launch of multiple generics products in the United States.
Sales of another MS drug, Tysabri may have benefited from volume increases and patient growth, despite increased competitive pressure and price reductions in certain European markets.
The Zacks Consensus Estimate for sales of Tecfidera in the fourth quarter is pegged at $442 million while that for Tysabri is $493 million.
Sales of new MS drug Vumerity are likely to have improved sequentially in the fourth quarter, continuing the trend observed in the past three quarters of 2021.
Biogen receives royalties on U.S. sales of
Roche
’s
RHHBY
newly launched MS drug, Ocrevus which will also have contributed to the top line. The Zacks Consensus Estimate for Ocrevus royalties is $244 million.
Roche’s Ocrevus (ocrelizumab) was approved for the treatment of relapsing MS (RMS) and primary progressive MS (PPMS) in March 2017
The negative impact of COVID-19 and increased competition in the United States are likely to have hurt sales of Biogen’s spinal muscular atrophy drug Spinraza in the United States. Outside the United States, sales of Spinraza might have been hurt due to competition and pricing pressure in Europe. The Zacks Consensus Estimate for sales of Spinraza is $549 million.
Sales of new Alzheimer’s drug, Aduhelm, are likely to have been slow as patient access is limited, pending the CMS reimbursement decision.
In January 2022, the Centers for Medicare & Medicaid Services (CMS) released a proposed National Coverage Determination (NCD) decision for the class of anti-amyloid antibodies like Aduhelm. Per the NDC, Medicare proposes covering FDA-approved drugs like Aduhelm only for patients enrolled in qualifying clinical studies. The final decision is expected in April. If the draft decision is approved finally in April, it will restrict patient access to Aduhelm and hurt sales of the drug in 2022 as well. However, the final decision could vary from the draft ruling.
In December, Biogen lowered the wholesale acquisition cost (WAC) of Aduhelm by approximately 50% effective Jan 1, 2022, expecting the demand to improve as a result. However, the benefit of this price cut is unlikely to have impacted Aduhelm’s sales in the fourth quarter.
The approval of the drug in Europe is also uncertain now as in December, the Committee for Medicinal Products for Human Use (“CHMP”) of the European Medicines Agency (“EMA”) gave a negative opinion regarding Biogen’s marketing authorization application (MAA) for aducanumab.
Biosimilars revenues may continue to have been hurt by pricing pressure and the impact of COVID-19 in the fourth quarter. The Zacks Consensus Estimate for sales of biosimilars is $210 million.
Biogen markets three anti-TNF biosimilars in Europe — Flixabi (a biosimilar referencing Remicade), Benepali (a biosimilar referencing Enbrel) and Imraldi (a biosimilar referencing Humira) through Samsung Bioepis, the joint venture with its South Korean partner, Samsung Biologics. Last week, Biogen announced an agreement with Samsung Biologics to sell its equity stake in Samsung Bioepis for a payment of up to $2.3 billion. With the acquisition of Biogen’s 49.9% stake in Samsung Bioepis, Samsung Biologics will have full ownership of the joint venture.
SG&A costs are expected to have been seasonally higher in the fourth quarter.
Earnings Whispers
Our proven model predicts an earnings beat for Biogen in the to-be-reported quarter. A stock needs to have both a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.
Earnings ESP:
Biogen’s Earnings ESP is +0.63% as the Most Accurate Estimate of $3.35 is higher than the Zacks Consensus Estimate of $3.33. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Zacks Rank:
Biogen has a Zacks Rank #3
Other Stocks to Consider
Here are some large drug/biotech stocks that also have the right combination of elements to beat on earnings this time around:
Moderna
MRNA
with an Earnings ESP of +10.03% and a Zacks Rank #3. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Moderna topped earnings estimates in two of the last four quarters. Moderna has a four-quarter negative earnings surprise of 35.84%, on average. The stock is down 37.2% this year so far.
Amgen
AMGN
has an Earnings ESP of +2.53% and a Zacks Rank #3.Amgen’s stock is up 1.9% this year so far.
Amgen also topped earnings estimates in three of the last four quarters. Amgen has a four-quarter earnings surprise of 5.65%, on average.
Stay on top of upcoming earnings announcements with the
Zacks Earnings Calendar
.
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