Biogen Inc Looking Better After Earnings (BIIB)

OK, so maybe sales of Biogen Inc (BIIB) multiple sclerosis drug Tecfidera aren’t so anemic after all.

Biogen Inc Looking Better After Earnings (BIIB)The market had grown concerned after sales of the greatly ballyhooed drug started to slow down last year … far too soon for the relatively new therapy, which only hit the market in mid-2013.

Indeed, BIIB was down more than 30% from its mid-2015 price as of Tuesday’s close, and knocking on the door of new 52-weeks lows on concerns Biogen would once again post troubling Tecfidera. Looks like the pessimists overshot, though, as BIIB shares are up nearly 7% following this morning’s release of last quarter’s numbers.

The big question is, is this strength from the stock — and the company’s apparent sales rebound — built to last?

Biogen Earnings

Last quarter, biotech outfit Biogen earned $4.50 per share on revenue of $2.84 billion. Analysts were only looking for a bottom line of $4.08 per share of BIIB and sales of $2.71 billion. Perhaps better yet, both Q4 figures were better than the year-ago tallies of $4.09 per share and a top line of $2.64 billion.

For the full fiscal year, the Biogen earning report indicated a profit of $15.34 per share on sales of $10.76 billion, missing the initial earnings estimates, though topping sales expectations.

Biogen is calling for more of the same kind of growth this year, offering profit guidance of between $18.30 and $18.60 per share, supported by sales between $11.1 billion and $11.3 billion, in line with average estimates.

CEO George A. Scangos, Ph.D., said of the results:

“We saw solid performance in our industry leading multiple sclerosis portfolio and strong adoption of our hemophilia therapies. We continue to make investments in important and promising programs that we believe have the potential to help people suffering from devastating diseases, and we are also excited about the potential to launch three new products this year: BENEPALI(r), ZINBRYTATM, and an infliximab biosimilar.”

Portfolio Vs. Pipeline

Multiple sclerosis drug Tecfidera isn’t the only drug Biogen sells, but there’s no denying it’s the most important right now. That is, if the company is going to exceed or miss estimates, it will be because of Tecfidera.

To that end, Biogen is still growing its Tecfidera business, selling $993 million worth of the drug last quarter. That compares favorably to the $916 million worth of sales the drug drove in the same quarter of 2014.

Perhaps more important, Tecfidera sales grew sequentially too — from Q3’s $937 million — at least partially alleviating fears that 2015 would be the peak performance year for the therapy. It was the second quarter of sequential growth; the company sold $883 million worth of Tecfidera in Q2.

And yet, while 2015 was largely spent on the debating the future of Tecfidera, many investors may have overlooked that the biotech company now has five Phase-3 trials underway, exploring four different drugs. A fifth drug is done with trials and is now in the FDA’s hands, waiting on the agency’s approval.

While it’s unlikely anything in the pipeline will achieve the same kind of rapid success Tecfidera did, it is time for traders to begin recognizing the company’s fate doesn’t entirely rest on Tecfidera’s shoulders.

Bottom Line for BIIB

Granted, while the pipeline is full, Tecfidera is going to be the workhorse between now and any approvals of those pending drugs. And though Tecfidera will probably never see the same explosive growth pace it set in 2013 and 2014, it might be unfair to expect strong double-digit growth going forward. It is, after all, still the best-selling MS pill.

As for the stock, while BIIB may not have been worth the $400 per share it was trading at in the first half of 2015 when investors were still stoked about Tecfidera, in the shadow of a 30% pullback from the stock and sporting a price-to-earnings ratio of 15, the valuation makes a lot more sense given the plausible outlook for Tecfidera and Biogen’s pipeline.

In other words, you could do worse than taking a shot on BIIB

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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