Sales of its multiple sclerosis drugs missed analysts’ revenue expectations, and the cuts to guidance indicate that Biogen expects those sales to remain lower than previous estimates. The Company develops, manufactures and markets products designed for the treatment of multiple sclerosis (NASDAQ:BIIB) and hemophilia A and B.
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Pre-market share price movement is noted to be on a major decline, as the company missed revenues estimate by 12.22% substantially, dragging the share price to $337.50 as at 8:37 AM EDT, which reflects an overwhelming bearish stance on the company’s future growth. This number is offset by patients stopping the drug because either Tecfidera has stopped helping them reduce their flare-ups, or they’re discontinuing treatment because of side effects, most notably gastrointestinal issues – nausea, vomiting, diarrhea, and the like.
One of the reasons Tecfidera did not record great sales is safety concerns arising after one of the patients taking the drug died from a rare brain infection. While analysts expected the figure to come in at $2.71 billion for the quarter, the actual figure came in at $2.59 billion.
For the second quarter of fiscal year 2015 (2QFY15), BIIB excluded a non-recurring cost before reporting an adjusted earnings per share of $4.22. The drug gained popularity because of its convenience and strong effectiveness.
Tecfidera accounted for $883 million in revenue in the second quarter, up from $825 million in the first quarter and $700 million during the same period in 2014. That compares with $714.5 million, or $3.01 per share, a year earlier. Finally, analysts at Robert W. Baird reiterated an outperform rating and set a $480.00 price target on shares of Biogen in a research note on Wednesday. If the clinical trials turn out positive, and the drugs are approved for additional indications, we could see further growth from the drugs.
Biogen’s stock fell as much as 18.8 percent to a seven-month low, wiping out about $17 billion of its value, after the company’s weak forecast and lackluster second-quarter results on Friday. Mr. Scangos, the company’s CEO, has said in the past that high equity valuations for biotech companies made him cautious about acquisitions. The company has a market cap of $70.57 billion and a price-to-earnings ratio of 21.67. Consensus was already below the company’s target after a weak Q1, but the new guidance undercut even that. “We will be aggressive when we see good opportunities that are consistent with our strategy, so I think you can count on that”, he added. Analysts at Goldman Sachs raised their price target on shares of Biogen from $434.00 to $435.00 and gave the company a “neutral” rating in a research note on Monday.
Chelsey Dulaney contributed to this article.
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Biogen’s Chief Executive Officer George Scangos suggested the company is studying significant deals, which have bolstered other biotechs such as Celgene Corp.
