When Biogen launched its highly anticipated spinal muscular atrophy (SMA) drug Spinraza, its $125,000-per-injection list price raised questions of whether there would be a payer backlash. Those questions were clearly answered today.
Biogen reported second-quarter sales of Spinraza at $203 million, which helped power the company to record revenues and allowed it to raise its full-year earnings forecast. Sales of Spinraza were nearly three times what some analysts forecast, allowing the Cambridge, Massachusetts-based big biotech to generate $3.08 billion in the second quarter, well past the street’s estimates.
The company reported $5.04 in earnings per share, also beating the street’s estimates, and allowing the company to raise both ends of its full-year earnings forecast. It is now projecting non-GAAP diluted EPS of between $20.80 and $21.40, up from its earlier estimate of $20.45 to $21.25.
"Our missions is clear," CEO Michel Vounatsos said in a call with analysts today. "The world needs a leader in neuroscience, and we aim to be that leader.”
Vounatsos, who took on the CEO job at Biogen in December as Spinraza was getting approved, said today that he expects the orphan drug to become one of the company’s best-selling meds and to help shift the company’s center of gravity.
When Biogen first priced the drug, its cost of $750,000 for the first year and $375,000 after that raised some a red flags. Molina Healthcare even warned investors it hadn’t factored the drug into its expectations for this year and that covering the new drug might affect its earnings.
Biogen defended the price had been carefully considered and was in line with other rare disease drugs.
By last month, indications were that payers were getting more comfortable covering the drug. Bernstein analyst Ronny Gal in a note to clients said that it had found 11 of 15 of the largest payers covered the med in patients with SMA types 1 through 3. Only Humana and Blue Cross and Blue Shield of North Carolina restricting its use to type 1.
Gal found also that there was an uptake challenge in finding doctors comfortable doing the intrathecal administration Spinraza requires, a route of delivery into the spinal canal that requires two to three attending physicians.
Vounatsos on the call today said doctors are getting more comfortable with the process. He also said that some patients who have had spinal fusion surgery are unable to get the injection but said Biogen is working with doctors, and payers, to find a way for them to receive treatment.
While Spinraza was the star of the quarter, biogen also saw significant growth in sales of Tecfidera. Revenues from the company’s multiple sclerosis franchise have been under pressure, particularly from Roche’s Ocrevus, but Tecfidera came in at $1.1 billion, slightly ahead of expectations, and up 13% from the same quarter a year ago. That moved the results for Biogen’s MS franchise up 5%.
To help build its MS sales, Biogen has been trying value-based contracts. Vounatsos today said the company has nailed down four value-based contracts so far and would continue to develop those.