Don't panic about Spinraza's slowdown, Biogen executives say. It's got plenty of room to grow

Biogen's Spinraza generated $364 million in the first quarter. (Biogen)

Biogen's pricey spinal muscular atrophy drug Spinraza shot out of the gate during its launch last year, but first-quarter sales this year failed to impress in the same way. 

As executives pointed out during the quarterly earnings call, Spinraza's early days on the market are a tough act to follow. A new campaign aimed at adults could help, CEO Michael Vounatsos said. But analysts are still worried, given the pricey med's importance to Biogen's financial future—and tough times for its multiple sclerosis business.

Vounatsos did acknowledge new Spinraza starts moderated in the U.S. in the quarter after last year's massive surge of patients seeking treatment. The drug missed consensus analyst expectations by $15 million, turning in $364 million for the quarter. That was slightly up from $363 million in the fourth-quarter last year.

RELATED: Payer buy-in for Biogen's Spinraza gives big biotech major revenue boost

About 4,100 patients are now on the med, Vounatsos said, leaving about 5,000 SMA patients in the U.S. who remain untreated. Another 2,000-plus are untreated in Europe.

As executives looked to soothe potentially anxious investors during the earnings call, Vounatsos emphasized Biogen's in-the-trenches efforts to boost Spinraza. The company is focused on building out its team to identify patients and get them on treatment. The drugmaker has a campaign focused on adult patients that's "starting to see traction," the CEO added.

In a note Tuesday, SunTrust analyst Yatin Suneja said the performance was in some part because more patients are on maintenance doses—40% in the first quarter of 2018 versus 25% for last quarter of 2017. Biogen priced the drug at $750,000 for the first year and $375,000 for subsequent years, meaning that as new starts slow, more patients will be taking the follow-up, cheaper doses.

Suneja thought investors may be concerned to see Spinraza missing expectations, especially because it's "expected to be a key growth driver for the company over the next several years." 

RELATED: Biogen's $375K Spinraza price puts a Sovaldi-style spotlight on rare disease meds 

Elsewhere, Biogen's important multiple sclerosis business suffered from a "larger than expected" inventory drawdown—$180 million—and "usual seasonality," Vounatsos told investors. Chief financial officer Jeff Capello said that customers expected the regular price increases Biogen takes in the first quarter. They stock up at the end of the year ahead of those hikes and then draw down that inventory in the first quarter.

But Biogen's also facing stepped-up competition for its MS meds, and more could be on its way—generic competition, no less, as early copies of Novartis' Gilenya hit the market. And then there's Roche's hotshot Ocrevus.

Still, execs maintain that the MS business remains strong, and Ocrevus itself could help. Even as Biogen competes against Ocrevus, the company collects royalties under an agreement with Roche. For the quarter, Ocrevus royalties represented $77 million in revenue for Biogen.

RELATED: AbbVie's Humira gets biosim reprieve—and Amgen wins copycat advantage—in patent deal with Samsung Bioepis 

Importantly, Biogen's biosimilars chipped in $128 million in sales—93% more than during the same period last year. Vounatsos said the European biosim business is now tracking at $500 million per year, noting that the company's Humira biosim—partnered with Samsung Bioepis—is set to launch there in October under an agreement with AbbVie. 

During the quarter, the company repurchased about $250 million worth of shares and brought $3.5 billion in cash back from overseas. Biogen reports that 85% of its cash and cash equivalents are now in the U.S. On M&A, execs said the company will look for late- and midstage assets to add to its pipeline in core therapeutic areas while continuing to return capital to shareholders. 

Biogen generated $3.1 billion in sales for the period, or up 15% excluding its hemophilia business, which it spun off early last year.