Biogen's in the hunt for late-stage assets, executives say amid Q4 revenue beat

Biogen CEO Michel Vounatsos doesn’t “see a frenzy” of M&A coming to pharma because of an influx of overseas cash. But what activity he does predict? He expects to be part of it.

The company is “contemplating early assets, which remains the sweet spot where we can add tremendous value,” Vounatsos said on Biogen’s Q4 conference call Thursday. But it’s looking at later-stage assets, too, “to bring in things that are close to revenue,” CFO Jeff Capello added.

Biogen has resources to make it happen, too, they said, thanks to cash on hand at the end of the quarter, an ability to boost its leverage, and cash flow from the next five years. “[I]f you put all those factors together ... you get a $37 billion number, which gives us a lot of capacity to add to the business,” Capello said.

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As to just how Biogen might do that, rumors are already swirling that it could have its eye on Acorda, a neuro-focused drugmaker that recently put itself up for sale at activists’ urging. Acorda's Inbrija, a Parkinson’s candidate, would slot into Biogen’s pipeline well; the Big Biotech already has its own Parkinson’s prospect in the works with BIIB054, though that drug, still in phase 1, is far behind Inbrija.

Meanwhile, Biogen pulled off what Bernstein analyst Ronny Gal called “good” results for Q4, with revenues of $3.31 billion topping the $3.08 billion prediction from analysts. Key multiple sclerosis products Tecfidera and Tysabri and spinal muscular atrophy therapy Spinraza all posted beats, despite new competition to the MS drugs from Roche’s standout Ocrevus. Execs noted that they were “pleased” with Tecfidera’s performance against its new rival, while with Tysabri, new patient starts and patient discontinuation numbers—which Ocrevus affected when it first launched—“have now stabilized.”

On the earnings side, the Massachusetts drugmaker fell short of forecasts by 20 cents at $5.26 per share, but “we’re completely not concerned about that,” Gal said in an investor video, pointing to a slew of one-time charges that dragged that number down.

For 2018, Biogen laid out full-year guidance that “should boost confidence,” Leerink Partners analyst Geoffrey Porges wrote to clients; the company expects revenue to hit between $12.7 billion and $13 billion, with EPS checking in between $24.20 and $25.20.

Gal, for his part, called the numbers “reasonably conservative,” adding that “the company’s set up pretty well for 2018, as we see it today.