Biogen gets beaten up as slowing Tecfidera sales lead it to trim forecast

Biogen CEO George Scangos

The speed bump that sales of Biogen's ($BIIB) Tecfidera hit earlier this year, slowing its growth, has turned into a big old pothole and it has shaken investors pretty hard who have been along for the ride.

Last year Biogen found itself raising earnings projections as the MS drug outperformed expectations--but not today. It said instead that it expects its adjusted earnings for the year to range between $15.50 to $15.95 a share this year, below its earlier projection of $16.60 to $17 and significantly below the $16.74 that analysts were counting on, Bloomberg pointed out.

CEO George Scangos acknowledged in an earnings call that an "expected acceleration" for Tecfidera did not kick in. Slower sales in the U.S. and difficult pricing in Germany undercut the drug's growth and execs said they are not expecting that to change for the rest of the year. Executive VP Tony Kingsly said that doctors seemed to get more cautious about moving patients to oral drugs after the FDA last fall required a label change for the rare brain infection progressive multifocal leukoencephalopathy or PML. Facing "headwinds," Tecfidera pulled in $883 million in Q2 compared to $700 million in the same quarter last year.

Scangos said that Biogen believed Tecfidera remained the preferred oral option and more patients globally were being put on the product. He promised the company is "working hard to improve the trajectory," of the drug. In the meantime, Biogen will watch costs closely and work on educating doctors about the benefits of the MS pill.

The news was hard on Biogen shares, which fell more than 16% in mid-morning trading. RBC Capital analyst Michael Yee in a note to investors expressed disappointment, but remained sanguine about the company's future. He said "guidance was already under question so this is not a total shock despite the headlines." Yee also said that if there is even a 50% chance that Biogen's Alzheimer's drug candidate will be approved, then Biogen could see transformative growth with revenues and earnings doubling.

And it is Biogen's Alzheimer's candidate that, until today, has been getting all of the attention of late. However, results from a small trial released on Wednesday readjusted expectations when a midrange dose did not provide statistically effective on patient's cognitive decline. While a higher dose has, it exhibited higher toxicity. Biogen pointed out that the trial was small and Scangos said today that the company was committed to investing "in the science that is core to our future."

Overall, Biogen saw revenue rise 7% to $2.6 billion, short of forecasts, although adjusted earnings of $4.22 a share actually beat analyst projections of $4.10 a share, Bloomberg said. And there were some other difficulties. Tysabri, another MS treatment, saw sales fall to $463 million from $533 million in the previous year's quarter.

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