Biogen's Tecfidera holds its own in MS as competitive and generic threats loom

Biogen expects 2020 revenues of at least $14 billion, but SG&A could be 20% of sales, far outpacing the 17% analysts had been expecting. (Biogen)

Biogen’s stock fell 14% over the last year as investors fretted over stagnating sales of its multiple sclerosis drugs, most notably its best-selling Tecfidera. But investors definitely perked up Thursday morning, when the company reported a better-than-expected performance from its MS franchise.

Amid competitive threats from several new MS drugs—and a patent dispute in which a key decision is expected next week—Biogen managed to grow sales of Tecfidera 5% during the fourth quarter to $1.2 billion. That helped drive the company’s total MS revenues for all of 2019 up 2% to $9.2 billion.

Sales of Vumerity, the Tecfidera follow-up drug that Biogen launched late last year, came in at $5 million. During a conference call following the earnings release, Biogen CEO Michel Vounatsos told analysts he was optimistic about the newly launched product, largely because of the positive reception it has received from insurers.  

“We are pleased with the access to date, which is superior to what we have seen from the competition a few months after launch,” Vounatsos said.

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Perhaps, but pressure from rivals shows no signs of letting up anytime soon. Recent MS launches include Novartis’ Mayzent and Merck KGaA’s Mavenclad. Then there’s Novartis’ cancer drug Arzerra (ofatumumab), which the company has been working to repurpose in MS. Results from clinical trials of the drug have been so impressive that a group of physicians polled by SVB Leerink late last year listed it as one of the most promising choices for treating MS, even though it has not yet been approved for that use.

As if branded competition isn't enough of a worry, Biogen is also facing the prospect that it could lose a key patent on Tecfidera. Mylan challenged the patent last year, and a decision from the Patent Trial and Appeals Board is expected in the first week of February.

Biogen is also facing competition in spinal muscular atrophy (SMA), though so far, it’s holding its own there, as well. Novartis’ gene therapy Zolgensma was expected to steal market share from Biogen’s SMA drug Spinraza. But sales of Spinraza jumped 16% in the fourth quarter to $543 million and 22% for the full year to $2.1 billion.

“Zolgensma hasn't yet made too drastic of an impact,” wrote Jefferies analyst Michael Yee in a note to investors. That said, Biogen could be facing another SMA rival later this year: Risdiplam, which Roche is developing with PTC Therapeutics. The two companies scored a priority review for the product late last year.

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Biogen told analysts to expect 2020 revenues to come in between $14 billion and $14.3 billion, with non-GAAP EPS of $31.50 to $33.50. That’s about in line with expectations, though Biogen’s expectation that its sales and administrative costs would be about 20% of total revenues was way above the consensus expectation of 17%.

Yee speculated in his note that the uptick in costs might be related to aducanumab, the Alzheimer’s candidate that Biogen unexpectedly resurrected last year. Is the company attempting to “account for a potential aducanumab launch?” he asked in his note.

During the call, Vounatsos acknowledged that the executive team is so optimistic about Biogen’s future in Alzheimer’s that it’s making concrete plans for aducanumab. “We are actively preparing for the potential launch of aducanumab, with an initial focus on the U.S.,” he said. “This includes implementing the … go-to-market model, hiring the salesforce, building out our medical teams and preparing for market access.”

Overall, Biogen reported total fourth-quarter sales of $3.7 billion, up 4% year-over-year, and total 2019 revenues that grew 7% to $14.4 billion. Non-GAAP earnings per share came in at $8.34 for the quarter and $33.57 for the full year, up 19% and 28% respectively, and beating the consensus estimates of $8.02 for the quarter and $33.20 for the year. Shares of Biogen rose more than 2% in premarket trading to $289.