The Food and Drug Administration granted Biogen an accelerated approval Tuesday for a drug that treats a muscle-wasting disease known as ALS. But Biogen stock remained hamstrung on a "low-quality earnings beat."
Biogen and Ionis Pharmaceuticals partnered to develop toferson — now known as Qalsody — a treatment for a rare genetic form of amyotrophic lateral sclerosis, or ALS. Also known as Lou Gehrig's disease, the condition causes progressive muscle weakness, eventually leading to death for most patients. The accelerated approval means Biogen still has to approve Qalsody's benefit in a final test.
The decision did little to boost Biogen stock, however. Shares sank 3.6% to 282.41 on the stock market today. Biogen is under pressure on what Piper Sandler analyst Christopher Raymond called a "low-quality earnings beat." He says the company's transformation under new Chief Executive Christopher Viehbacher "remains a work in progress."
Investors are closely watching Biogen's Eisai-partnered Alzheimer's drug, Leqembi, which also has an accelerated approval, and a depression treatment developed in partnership with Sage Therapeutics. Both could further stoke Biogen stock.
Biogen Stock: Alzheimer's Treatment Efforts
Overall, Biogen beat first-quarter expectations. The company earned $3.40 per share, minus some items, on $2.46 billion in sales. Earnings fell 3% but topped expectations by 12 cents a share. Sales skidded 6%. Still, analysts called for Biogen sales to come in even lower, at $2.34 billion.
Investors were watching closely for any sales from Leqembi. But Biogen lost $18.9 billion in its Leqembi collaboration with Eisai. This means Biogen and Eisai spent more to launch and market Leqembi than the drug generated.
Analysts expected a $16 billion loss on Leqembi in the quarter, Mizuho Securities analyst Salim Syed said in a note to clients. Biogen gained accelerated approval for Leqembi in January. Though Veterans Affairs is covering the cost of Leqembi for some patients, the Centers for Medicare and Medicaid Services has yet to make a reimbursement decision — a key factor in uptake.
Piper Sandler's Raymond is still bullish on Leqembi's chances and for Sage-partnered depression drug zuranolone to have a strong launch.
"We remind investors of our recent bullish survey feedback (for Leqembi), indicating meaningful upside to consensus," Raymond said in a note to clients. "As for zuranolone, we are encouraged by today's commentary that expectations on that launch may be too low. All-in, despite meaningful base business headwinds, we continue to like the setup as management continues to transform the business."
Multiple Sclerosis Sales Dive
Meanwhile, the multiple sclerosis franchise continues to decline. Biogen's bread-and-butter medicines are facing competition from new products and generic knockoffs. Sales of the MS portfolio plummeted 19% across the board to less than $1.13 billion.
Revenue from Tysabri missed forecasts at $473 million, but Tecfidera beat with $274 million, Wedbush analyst Laura Chico said in her note to clients.
She kept her neutral rating and 263 price target on Biogen stock, noting Biogen also cut research efforts in brain contusion, stroke and a movement disorder known as spinocerebellar ataxia. The company also plans to exit ophthalmology research.
Biogen reiterated its forecast for full-year sales to decline by a single-digit percentage despite the launch of Leqembi, enthusiasm for zuranolone and the fresh accelerated approval of Qalsody.
Biogen stock analysts project $9.56 billion in sales, which would fall 6%. They also expect the company to earn an adjusted $15.48 per share, in line with Biogen's reaffirmed outlook for profit to come in at $15-$16 per share.
Biogen stock is forming a double-bottom base with a buy point at 296, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
