Don't worry about Zolgensma, Biogen execs say. Spinraza has room to grow

After its second quarter performance, Biogen raised its 2019 revenue guidance to between $14 billion and $14.2 billion. (Biogen)

Biogen executives were forced to explain why their spinal muscular atrophy (SMA) drug Spinraza stopped in its tracks last quarter. After all, the launch had been speeding along till now. One thing's for sure, management promised: It's not because of Novartis' new rival therapy Zolgensma.

In the first quarter after Zolgensma’s debut, Spinraza posted a dip of 6%. Its $488 million in sales fell short of Street estimates by some $36 million, according to Piper Jaffray analysts. And that had market-watchers asking why.

Don't blame the quarter-over-quarter decline on Novartis’ Zolgensma approval in May, Biogen execs stressed. The rival drug is only approved for patients 2 years old and younger, who represent only about 5% of the SMA market, they said.

Biogen CEO Michel Vounatsos said it’s “premature to make assumptions” about uptake for any SMA treatments. It's still the early days, Vounatsos pointed out.

Spinraza has room to grow in the U.S. and elsewhere, execs said; the drug generated revenue in 40 markets in the quarter. In fact, the drug's growth prospects outside the U.S. are actually bigger than in the U.S. itself, one said.

But that ex-U.S. growth didn't materialize in the second quarter. Outside the U.S., execs said, Spinraza took hits from price declines in France, shipment timing and “continued transition from loading to maintenance doses in more mature markets." New patients start Spinraza with four doses in the first two months, followed by one maintenance dose every four months—and fewer doses equals less revenue.

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Even as Spinraza missed consensus estimates—which Piper Jaffray pegged at $524 million—the med did post 15% growth over second-quarter sales last year. Elsewhere in Biogen's business, multiple sclerosis revenues increased 3% to $2.4 billion, aided by $183 million in Ocrevus royalties from Roche. Biosimilar sales jumped to $184 million from $127 million year-over-year.

Pleased overall, Biogen raised its revenue guidance for the year to between $14 billion and $14.2 billion, up $400 million on either side. And the company is now expecting EPS for the year to come in between $29.60 and $30.40. 

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In a note to clients, Jefferies analyst Michael Yee wrote that the company turned in a good quarter, but investors are still concerned about potential competition to multiple sclerosis blockbuster Tecfidera and pipeline uncertainty.

Market watchers are also looking for the company to do M&A or business development to bring in pipeline drugs externally, he added.