If there’s one thing that prompts hand-wringing amongst Wall Street analysts who cover Biogen, it’s the company’s reluctance to present interim data from ongoing clinical trials of its closely watched Alzheimer’s drugs.
That anxiety was on full display Tuesday after Biogen's fourth-quarter results hit—and no wonder: As Biogen's new numbers show, the company's flagship multiple sclerosis portfolio is struggling to grow.
During the conference call following the company’s fourth-quarter results, analysts were particularly worried about Biogen’s phase 3 Alzheimer’s drug aducanumab. If an interim analysis shows signs of “futility,” that would need to be disclosed, because it’s considered material information, one analyst suggested. Isn’t Roche expected to disclose data on a rival Alzheimer’s drug candidate soon, another analyst asked, and how might that affect Biogen?
Each time, the answer from Biogen’s chief medical officer, Alfred Sandrock Jr., M.D., Ph.D., was some variation on “no comment,” usually with an apology attached.
The concern about Biogen’s pipeline comes as its MS revenues for all of 2018 were flat year over year at $9.1 billion, despite continued strong performance from Tecfidera, which brought in $1.1 billion in the fourth quarter alone, up 3% from the same period a year ago and slightly surpassing consensus estimates.
In fact, Tecfidera and Biogen’s drug to treat spinal muscular atrophy (SMA), Spinraza, helped drive fourth-quarter results (PDF) that beat expectations. Spinraza sales hit $470 million during the quarter, which missed analysts’ estimates but still represented nearly 30% year-over-year growth. Biogen reported total fourth-quarter revenues of $3.53 billion, up 7% year over year, and adjusted earnings per share of $6.99, beating the consensus estimate of $6.73.
Still, investors are counting on an Alzheimer's success to boost Biogen's growth curve. In addition to aducanumab, the company's Alzheimer’s pipeline includes BAN2401, an anti-amyloid antibody that’s partnered with Eisai. In October, Eisai presented phase 2 data on BAN2401 that looked good at first glance, but later raised questions about whether it might only prove effective in patients who carry the APOE4 gene, which increases the risk of Alzheimer’s. Eisai said it would discuss the drug's future with regulators while launching an open-label extension of the trial.
During the fourth-quarter conference call, executives emphasized that Biogen’s neuroscience pipeline isn’t just about Alzheimer’s. They added six new drugs to that pipeline during the fourth quarter, they pointed out, including experimental drugs to treat stroke, schizophrenia and amyotrophic lateral sclerosis (ALS).
“We continue to expand and progress our neuroscience pipeline, with strong momentum, building depth in our core growth areas. We are bridging the interconnectivity within science, as we aim to create multiple franchises beyond MS, SMA and Alzheimer’s disease,” said Biogen CEO Michel Vounatsos during the call. He added that 2018 “was one of the most productive years we have had in research and development, as we aim to further de-risk our pipeline and prepare for multiple potential launches in the early 2020s.”
So how else might Biogen expand its revenue base beyond MS and SMA? Acquisitions, of course. Biopharma industry analysts expect 2019 to be a big year for M&A in the industry, and Biogen’s name often appears on lists of likely acquirers. During the recent J.P. Morgan Healthcare Conference, Mizuho analyst Salim Syed noted that Biogen has $13 billion worth of financing to devote to making deals.
Vounatsos hasn’t shied away from the M&A speculation. “Biogen will continue to actively pursue business development and M&A,” he said at the start of the earnings call. When asked for details about the what types of assets the company is shopping for, he said the goal is to enhance Biogen’s core disease areas rather than to expand into new therapeutic categories. “We have a broad range of targets and we are working on that,” he added.