Biogen biosimilars and Spinraza fill MS void, but pipeline worries abound

biogen
Biogen's efforts to expand Spinraza's market paid off with a clinical trial in infants with SMA, but its gene therapy program hit a snag. (Biogen)

The burning question whenever Biogen unveils its numbers is this: Will its hot spinal muscular atrophy drug Spinraza be enough to cushion the blow from falling multiple sclerosis sales? Much to Wall Street’s relief, the answer in the third quarter was a resounding “yes.”

But this quarter's numbers weren't enough to quell analyst fears about the future, namely competition for Spinraza that could interfere with its growth and questions about its key Alzheimer's candidate—and the important clinical data due any day now.

Spinraza outperformed during the quarter at $468 million, up 73% from the same period a year ago and $24 million higher than analysts had expected. Biogen’s expanding biosimilar business also stepped up, charting better-than-expected sales of $135 million. Plus, expectations for further biosimilar growth are high as Biogen gets set to roll its low-cost version of AbbVie’s blockbuster Humira in Europe.

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All told, Biogen’s sales grew 12% year-over-year to $3.44 billion during the quarter, beating the consensus estimate of $3.33 billion. Hence the company’s non-GAAP earnings per share of $7.40 blew past the estimate of $6.80.

But Biogen’s flagship multiple sclerosis growth is still on the wane. In fact, MS sales came in flat year over year at $2.3 billion, with former star Tecfidera below expectations at $1.09 billion. That's an increase of just 2% year over year. Meanwhile, sales were down for all of the company’s other MS drugs except Tysabri, which managed flat sales of $470 million. What's growing is the revenue stream from Roche’s rival MS drug Ocrevus—which brought in $137 million this quarter alone—but that’s a double-edged sword, of course; the Roche drug is draining sales from Biogen's own portfolio.

So not surprisingly, analysts listening in to Biogen’s third-quarter earnings call were hoping for signs of progress in the near-term pipeline—a tall order, considering disappointments there, too. The company simultaneously announced that its lupus drug dapirolizumab pegol didn't meet its primary goal in a phase 2b study—and that it would be discussing next steps with its development partner UCB. Not good tidings for a drug Biogen had been hoping to launch in a few years.

RELATED: Biogen's Spinraza zooms through blockbusterland, but analysts are fixated on Alzheimer's data

Biogen also said it would discontinue the development of vixotrigine in painful lumbosacral radiculopathy after charting disappointing results from a phase 2b study in September. It had been planning a phase 3 study in trigeminal neuralgia but put that program on hold pending discussions with the FDA.

The company's hopes now lean even more on Spinraza, which Biogen hopes to expand by growing its market. Earlier this month, Biogen unveiled data showing that infants with the disease can benefit significantly if they’re treated before they develop symptoms.

RELATED: Biogen's new Spinraza data for earlier use 'pretty amazing,' analyst says

But there's a potential spoiler here, too, with competition nearing the market, most notably from Roche and PTC Therapeutics. Those two companies are developing an oral drug to rival Spinraza. Around the time Biogen released its positive data in infants, Roche and PTC stepped up with data showing that their drug, risdiplam, improves outcomes in both babies and young adults.

What’s more, Novartis’ AveXis is posting progress with a gene therapy for SMA, filed for FDA approval just last week. Biogen had been developing its own gene therapy to treat the disease in partnership with the University of Pennsylvania, but as announced on its secon-quarter call, the FDA put that program on hold. This time around, Biogen executives said the agency had raised questions about preclinical data, sparking Jefferies analyst Michael Yee to speculate “it's possible they don't take this forward” in a note to investors.

When asked about the potential for competition to stall Spinraza’s fast run toward blockbuster status during the call, Biogen CEO Michel Vounatsos said he wasn’t worried: “We are adding momentum in the U.S. in the pediatric population. This was … uncertain at the beginning of the year. And ex-U.S. we have staggering launches in different geographies.” The company is doing well in in Europe and Japan and has high hopes for China and Latin America, he added. “So the momentum is good.”

The earnings announcement came two days before the next big event for Biogen’s pipeline: a key data release on BAN2401, an Alzheimer’s drug it is developing with Eisai. The companies initially said the treatment didn’t outperform placebo in the first 12 months of a phase 2 trial, but when they followed the patients in the trial for another 6 months, they saw a statistically significant slowing of symptoms at the highest dose. More details—namely data that will likely determine whether the drug moves to phase 3—will be presented on Thursday at the Clinical Trials on Alzheimer’s Disease conference in Barcelona.

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