Biogen Beats, Tecfidera Continues to Fly

Biogen Idec (BIIB) on Monday reported third quarter revenue of $1.8 billion, an increase of 32% from last year’s third quarter, and earnings of $2.05 per share. More importantly, Tecfidera sales of $286 million topped analyst expectations for $205-235M. Since PropThink’s last update in mid-June, where we suggested owning the stock on recent weakness, BIIB is up 25%, 80% from our initial recommendation last year.

In June we suggested that Biogen’s new medication for multiple sclerosis would continue to outperform expectations through the end of the year, and the launch has yet to disappoint. Despite being on the market for just 6 months, Tecfidera is already the leading oral MS therapy in the United States. Tecfidera has yet to clear regulatory hurdles in Europe, but the CHMP is expected to make a decision in November. Analysts expect the drug to reach peak sales of $3 billion, by far the company’s most important source of revenue growth. Management seems to be talking down expectations for the launch to continue at its torrential pace, but Tecfidera is on track to generate over a billion sales dollars next year.

Idec reported steady progress from the rest of its MS product line (Avonex and Tysabri). Avonex sales decreased slightly from last year but it remains popular due to its ease of use within the injectable MS landscape. Tysabri sales were flat from 2012, however revenue to Biogen increased by 46% as a result of the company’s acquisition of full rights from Elan in the second quarter of this year.

In the pipeline, eloctate, indicated for Hemophilia Type A, is poised to grow the hemophilia market significantly, as current treatments are used as bleeding occurs; as a prophylactic, eloctate is far more convenient. Biogen warned that eloctate may see manufacturing-related delays in the approval process. Although not a safety issue, the company said it was “premature to discuss the development,” but would update as ongoing discussions with the FDA wrapped up. Most analysts had expected the drug to be approved by the second quarter of next year.

Overall, Biogen’s Tecfidera continues to surprise and beat analyst estimates, even after a profound start out of the gate early this year. Given Tecfidera’s robust domestic launch, BIIB remains a favorite holding at PropThink.

In connection with BIIB, PropThink has taken a long position.