The good news is that Biogen Inc.'s efforts last year to regroup after slumping sales of multiple sclerosis drug Tecfidera (dimethyl fumarate) resulted in a dismal first half of 2015 appear to be working. For the second quarter in a row, the Cambridge, Mass.-based firm posted solid earnings, with its fourth quarter earnings per share (EPS) beating consensus estimates and, thanks in part to inventory stocking, sales of Tecfidera ending the year in line with expectations.

Shares (NASDAQ:BIIB) gained $13.39, to close Wednesday at $273.26, giving the firm a market cap of roughly $63 billion. For a company that was on the cusp of breaking into the $100-billion market cap club last year, the rebound might seem modest. But as analyst Chris Raymond, of Raymond James Equity Research, noted, given the low expectations heading into the fourth quarter earnings, "we view the results as an encouraging development." (See BioWorld Today, Aug. 10, 2015.)

While fourth quarter revenue fell slightly short of consensus estimates – $2.4 billion vs. $2.7 billion – the non-GAAP EPS totaled $4.50, higher than the $4.08 predicted by analysts. Sales of Tecfidera totaled $993 million, including $785 million in U.S. sales, which beat consensus estimates projecting U.S. sales of $748 million. Despite the direct-to-consumer campaign launched late last year, Biogen acknowledged that much of the boost in Tecfidera sales was due to an inventory increase of about $30 million. Full-year sales reached $3.6 billion meeting estimates averaged by Cortellis Competitive Intelligence.

The rest of its MS franchise came in slightly above expectations: Interferon products Avonex and Plegridy posted sales of $740 million vs. consensus of $721 million, while Tysabri (natalizumab) recorded fourth quarter sales of $481 million vs. consensus of $475 million.

Its hemophilia franchise also fell more or less in line, with Alprolix (coagulation factor IX [recombinant], Fc fusion protein) revenues totaling $71 million and Eloctate (antihemophilic factor [recombinant], Fc fusion protein) totaling $101 million. Cowen and Co. analyst Eric Schmidt wrote in a research note that Alprolix has likely plateaued, though Eloctate "has more room to grow." Both drugs were developed in partnership with Swedish Orphan Biovitrum AB, of Stockholm.

Biogen reported net revenues from leukemia drugs Rituxan (rituximab) and Gazyva (obinutuzumab), both part of a joint business arrangement with Roche AG, of $334 million for the quarter. Revenues from Acorda Pharmaceuticals Inc.-partnered MS drug Fampyra (dalfampridine) and psoriasis drug Fumaderm totaled $40 million.

For the full year, revenues reached $10.8 billion, up 11 percent over 2014. Non-GAAP EPS was $17.01.

"Although the revenues were less than we'd anticipated at the beginning of last year, I'm pleased we were able to take appropriate action in the second half of the year to maintain healthy earnings growth," Biogen CEO George Scangos noted on the company's earnings call. That action included a restructuring plan involving an 11 percent cut to its work force and the discontinuation of several programs, including a phase III program testing Tecfidera in secondary progressive MS, development of an anti-TWEAK compound in lupus and unnamed immunology and fibrosis research programs. (See BioWorld Today, Oct. 22, 2015.)

Going into 2016, Biogen is expecting the launch of recently approved Benepali, a biosimilar version of Amgen Inc.'s Enbrel (etanercept), which gained EU approval. Benepali was developed in Biogen's joint venture with Samsung Biologics Co. Ltd. (See BioWorld Today, Jan 20, 2016.)

The not-so-good news is that while the positive second half of 2015 might have stabilized Biogen's business, near-term growth is likely to be modest at best. Biogen approached its 2016 guidance conservatively, anticipating full year revenue to total about $11.1 billion to $11.3 billion, with R&D expenses comprising about 19 percent to 20 percent of total revenue.

Shares could pop on promising data readouts this year, but any optimism is cautious, given the company's late-stage pipeline features drugs in high-risk areas such as Alzheimer's disease (AD).

INTERESTING OPPORTUNITIES

Biogen investors celebrated last year when early clinical data for aducanumab reduced amyloid plaque and slowed cognitive decline in patients with AD. The human recombinant monoclonal antibody, in-licensed in 2007 from Zurich, Switzerland-based Neurimmune Therapeutics AG, moved into phase III testing in prodromal, or mild, AD, in August, but that study now looks like it could take longer than initially expected. (See BioWorld Today, March 23, 2015.)

Despite "substantial interest in the program," Alfred W. Sandrock, Biogen's chief medical officer noted the "inherent challenges in recruiting patients with early Alzheimer's disease and the limited availability of PET scanners."

Cowen's Schmidt said he expects phase III data in 2019.

Biogen has two midstage candidates, partnered with Eisai Inc., targeting AD, with interim safety data expected this year for small-molecule BACE1 inhibitor E2609 and top-line efficacy data for BAN2401, a monoclonal antibody targeting amyloid beta. The firm's anti-LINGO compound, meanwhile, is in the ongoing phase II SYNERGY trial in MS, with results expected in midyear.

"We have low expectations for these programs," wrote Schmidt in a research note. He's more positive on antisense drug nusinersen (ISIS-SMNRx). In partnership with Ionis Pharmaceuticals Inc., Biogen has nusinersen, which recently completed enrollment in the phase III CHERISH trial in children with childhood-onset spinal muscular atrophy (SMA) and is expected to wrap up enrollment in the first half of this year in the phase III ENDEAR trial in infants with infantile-onset SMA. (See BioWorld Today, Aug. 4, 2014.)

Expected to move to phase III this year is amiselimod (MT-1303), an S1P1 inhibitor for inflammatory bowel disease, and raxatrigine, a small-molecule inhibitor of the Nav1.7 sodium channel, in patients with trigeminal neuralgia. Raxatrigine, formerly CNV1014802, was acquired early last year in the $675 million buyout of Convergence Pharmaceuticals Ltd. (See BioWorld Today, Jan. 13, 2015.)

Biogen, which purchased about 16.8 million shares in 2015, completing its $5 billion share repurchase program, ended the year with about $6.2 billion in cash, equivalents and marketable securities. The company also indicated in its earnings that it has earmarked about $100 million to add to its pipeline via deals, and executives suggested early stage biopharma deals would be a focus, given the current market conditions.

"As it gets more difficult and less attractive to raise money from the financial markets, obviously other alternatives become more attractive," Scangos told investors. "We'll take the current views of the market to hold for a while or deteriorate further. If that happens, then I believe there'll be interesting opportunities for us."

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