Biogen stock skidded Wednesday on a "low-quality" sales beat that relied on other revenue. But analysts zeroed in on its strong launch for a Friedreich's ataxia drug.
Biogen acquired the Friedreich's ataxia treatment, Skyclarys, along with Reata Pharmaceuticals for about $7.3 billion. Friedreich's ataxia is an inherited disease that affects the nerves. It can cause trouble walking, fatigue and slowed speech.
During the September quarter, Biogen says Skyclarys brought in $43 million in sales. That doubled analysts' forecasts, RBC Capital Markets analyst Brian Abrahams said in a note to clients. There are about 860 patients taking Skyclarys and 1,180 patients have filled out the paperwork to start.
"Our recent neurology survey indicated physicians were using Skyclarys in about 19% of their Friedreich's ataxia patients at present, and this aligns with Biogen's patient numbers," Wedbush analyst Laura Chico said in a report.
Biogen stock fell 5.7% on today's stock market, ending the regular session at 231.69.
Biogen Stock Falls Due To Misleading Sales Numbers
Mizuho Securities analyst Salim Syed, however, called Biogen's sales beat "low quality," and RBC's Abrahams echoed his sentiment. Across the board, Biogen's sales inched 1% higher to $2.53 billion, beating forecasts for $2.4 billion, according to FactSet.
But the topline beat was primarily driven by Biogen's "other revenue" segment, where sales came in at $304 million vs. expectations for $195 million, Abrahams said. Wedbush's Chico noted excluding the other revenues, sales of Biogen's products fell 8% year over year to $1.81 billion.
"Without this variable effect, this quarter would have been in line, showing steadiness in the base business," Abrahams said. He has an outperform rating and 351 price target on Biogen stock.
On an adjusted basis, earnings tumbled 9% year over year to $4.36 per share. But that topped views for $3.97.
Spinraza Beats, But Tecfidera Lags
Revenue from spinal muscular atrophy treatment Spinraza proved to be a bright spot, growing 4% to $448.2 million and beating calls for $403 million. Biosimilars, low-cost copies of biologic drugs, generated $194.3 million, also climbing 4%. Analysts expected just $183 million in biosimilar sales.
But sales of multiple sclerosis drug Tecfidera missed. Tecfidera sales tumbled more than 29% to $239.5 million. Tecfidera is facing competition from generics. Sales came in short of estimates for $244 million, according to the reports from Wedbush and Mizuho.
Multiple sclerosis med Tysabri also lagged sales forecasts at $456.3 million, down almost 10%. Wall Street expected $467 million to $474 million in sales, according to analysts' notes.
"Negative impacts due to pricing, competition which is a continued theme," Wedbush's Chico said. She has a neutral rating and 266 price target on Biogen stock.
Biogen noted partner Eisai logged $2 million in third-quarter sales from Alzheimer's drug, Leqembi. Piper Sandler analyst Christopher Raymond said that missed expectations for $7 million to $17 million in sales.
Earnings Guidance Cut Hits Biogen Stock
For the year, Biogen guided to adjusted earnings of $14.50 to $15 per share and a low single-digit decline in sales.
Three months ago, Biogen expected to earn $15 to $16 per share and for sales to dip by a mid single-digit percentage. The guidance shift follows Biogen's acquisition of Reata, which is expected to have a 75-cent negative impact to earnings. Biogen also noted changes due to the approval of postpartum depression drug Zurzuvae and the company's shares of expenses tied to Leqembi.
Biogen stock analysts forecast earnings of $14.23 per share and $9.06 billion in sales.
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