CEO George Scangos said Biogen Inc. has "deliberately brought in a series of compounds and [is] conducting late-stage trials and things that are outside" of multiple sclerosis (MS) in order to keep the business growing. Thursday's reaction to first quarter earnings by the Cambridge, Mass.-based firm varied from "a solid start to the year and biotech earnings season" (Cowen and Co. analyst Eric Schmidt) to "good enough is the theme right now" (RBC Capital Markets' Michael Yee). Piper Jaffray's Joshua Schimmer observed drily: "Lower spending, otherwise same Biogen."

The company chalked up $2.7 billion in revenues, a 7 percent increase over the same period last year, thanks to a 15 percent rise in worldwide sales of MS drug Tecfidera (dimethyl fumarate), plus higher revenues from hemophilia therapies Eloctate (antihemophilic factor [recombinant], Fc fusion protein) and Alprolix (coagulation factor IX [recombinant], Fc fusion protein).

"Eloctate and Alprolix are doing well," Scangos said during a conference call with investors. "They're gaining market share and we're pleased with their performance. We have not yet seen any impact on their trajectories from the introduction of other long-acting factors, so we take that as a positive sign. I think the prospects for the business look quite healthy."

This week, San Rafael, Calif.-based Biomarin Pharmaceutical Inc. offered preliminary data from eight patients in an ongoing phase I/II experiment with its gene therapy hemophilia A treatment BMN 270. "Those are early – I would say interesting data but early," Scangos said. "It's similar, I think, to our immune-tolerance induction data that we have with Eloctate. We haven't talked about this a lot, but a fair number of hemophiliacs develop inhibitory antibodies when they're treated, and that results in the necessity for immune tolerance induction, which means high levels of factor that are given over 12 to 18 months before immune tolerance emerges."

Longer-term, Scangos acknowledged, "there are a number of [potentially competitive] products, as there are in every therapeutic area coming forward, and we're keeping a close eye on them," referring again to Biomarin. "I haven't seen anything that you haven't seen. I saw good factor VIII levels that persisted for some period of time. And we saw some liver enzyme issues that needed to be treated with corticosteroids. So, we'll see how that plays out over time."

A dip in worldwide interferon sales acted to offset Biogen's numbers somewhat – the firm has Avonex (interferon beta-1a) and Plegridy (peginterferon beta-1a) for MS, too – and foreign exchange headwinds hurt total revenues to the tune of about $50 million compared to the first quarter of 2015, the company said, including a $26 million drop in hedging gains. Combined worldwide Avonex/Plegridy revenue reached $670 million, missing the consensus of $726 million.

'UNIQUE SITUATION'

In all, revenue turned up 1 percent below consensus and 3 percent below Leerink's estimate, analyst Geoffrey Porges noted.

"The revenue weakness was in the U.S. MS business, where the company's products fell short of our expectations," a slip that was "increased by $40 million in channel inventory reduction, but also included the effect of further rebates to payers in an increasingly competitive category," he wrote in a research report.

The company has reduced its burn, with selling, general and administrative costs cut by 11.3 percent and research and development trimmed 5 percent.

A direct-to-consumer push with Tecfidera may yield results next quarter, Scangos said. "The main purpose of the ad campaign, television campaign, was to increase awareness of [the product]. We were surprised, actually, at the beginning by the low awareness among patients of Tecfidera, and we had data suggesting that when patients did learn about [the drug] and went to their physician to discuss it, they often had it prescribed. We wanted to get the awareness up. We've said we would see [the benefit from that], if we do, in the second quarter. Those ads don't run forever, so we're taking a pause. We'll continue our other types of activities, and we'll see what we learn and make decisions" about more TV ads.

Meanwhile, Scangos said, "if you look at what we're emphasizing now and what we have in phase III, it's nusinersen for spinal muscular atrophy [SMA]," a product formerly known as ISIS-SMNRx, partnered with Carlsbad, Calif.-based Ionis Pharmaceuticals Inc. "It's aducanumab for Alzheimer's [disease, AD], it's raxatrigine for neuropathic pain, it's amiselimod for irritable bowel syndrome and Crohn's disease," he said. (See BioWorld Today, Aug. 4, 2014, and March 23, 2015.)

RBC's Yee pointed out in research report that "Biogen is in a unique situation this year, whereby the core business is lackluster (minor growth for a big-cap biotech), but there are four or five major pipeline readouts over [the] next 12-plus months that could really move the needle." Among those he mentioned phase II-stage BAN2401 for AD, subject of a partnership between Biogen and Eisai Co. Ltd., data which "could help affirm the amyloid hypothesis." (See BioWorld Today, March 6, 2014.)

"The Street knows that first quarter earnings are seasonally weak and investors are willing to look beyond this and buy [Biogen stock] if there are catalysts, and core businesses are not much lower than already expected for the first quarter," in Yee's view.

"Yes, revenue was soft vs. expectations, but not totally unexpected, as previewed with seasonality and other issues. All key line items were a little bit light, particularly the big interferon franchise and also from currency and inventory, but this business has declined for [the] last three to four quarters and [is] lower than expectations," he noted.

Biogen shares (NASDAQ:BIIB) closed Thursday at $279.60, up $13.71.

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