Biogen cost-cutting pays off as Q1 profits top expectations

Biogen

Biogen has been working hard to reduce costs in the face of slowing sales of multiple sclerosis star Tecfidera. And those efforts paid off in Q1, the company reported on Thursday.

The Massachusetts company’s non-GAAP EPS checked in at $4.79, trouncing consensus estimates of $4.44. And that beat seemed to stem from good management of its operating expenses, with R&D and SG&A costs coming in “well below consensus,” Evercore ISI analyst Mark Schoenebaum wrote in a note to clients.

Management, too, acknowledged that efforts to pare down costs had proven successful, with CFO Paul Clancy telling investors on the quarterly conference call that “we believe the benefits materialized this quarter.” The Big Biotech announced a restructuring last October, noting that it would ax 11% of its workforce in a bid to save $250 million.

Of course, Biogen’s impetus for whittling down costs was to drum up resources to put behind Tecfidera, the company’s all-important oral MS contender. That drug brought in sales in line with consensus, notching $946 million for the quarter--although revenues did sequentially decrease, Schoenebaum noted.

Biogen’s interferon MS therapies also took a hit, with combined sales of Avonex and Plegridy--which tallied $670 million--coming in well below the $723 million Wall Street predicted. The company chalked up the slide to lower underlying demand as the market continues to shift toward oral options, and overall sales missed their mark as a result, coming in at $2.31 billion versus the $2.38 billion analysts predicted.

Meanwhile, with Biogen’s MS franchise facing mounting pressure--both standby Tysabri and Tecfidera are also currently up against IP challenges--industry watchers have been looking to the company to shore up revenues through dealmaking. And as CEO George Scangos told shareholders on the call, the company is working on it.

“We are in constant discussions with multiple parties” about deals of various types and sizes, he told them, noting that “we want to be active in this area while remaining financially disciplined.”

- see Biogen's release

Special Reports: Top 15 Drug Launch Superstars - Tecfidera - Biogen | The top 10 best-selling multiple sclerosis drugs of 2013 - Tecfidera

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