Charles J. Laurent
When Biogen reports earnings on Wednesday, the primary focus for investors will not be the numbers. Biogen, led by new CEO Chris Viehbacher, is currently focused on cost-cutting measures while simultaneously expanding its Alzheimer’s disease franchise. As for its older products, sales have either remained stagnant or declined.
Biogen's partner, Eisai, which is responsible for commercializing the Alzheimer's disease drug Leqembi, announced that U.S. sales for the quarter reached ¥0.4 billion ($2.7 billion). Although this figure was lower than some expectations, analysts predicted slow sales growth for Leqembi. As a result, Eisai’s American depositary receipt dropped 4.8% following the news.
“Today’s numbers shouldn’t come as a surprise,” stated Jefferies analyst Michael Yee, referring to the Eisai results. He further added, “Eisai is making steady progress on the launch with more prescribers and hospital networks on board, but it will take time for sales to grow.”
On the same day, Biogen's partner Sage Therapeutics disclosed the pricing for the postpartum depression drug Zurzuvae, which they are jointly commercializing. The two-week treatment course will be priced at $15,900. The price was lower than expected, causing shares of Sage to decline by 4.9% at midday, as stated by Leerink Partners analyst Marc Goodman.
According to UBS analyst Colin Bristow's note on November 1st, analysts are particularly interested in any developments related to the Leqembi launch. Additionally, they are keen to learn about the progress made in cost-cutting efforts and the company's strategy for business development. However, Bristow mentions that these results and the subsequent earnings call may not include any significant updates that would strongly impact the market.
Analysts are anticipating Biogen to report sales of $2.4 billion for the third quarter of the fiscal year, with an expected earnings figure of $3.97 per share. This indicates a decrease compared to the previous year when earnings were $4.77 per share.
Biogen's stock has seen a decline of approximately 11% this year. Furthermore, since June 2021, the stock has dropped over 35%. This decline is largely attributed to the disappointing commercial performance of their Alzheimer's drug, Aduhelm, despite initial excitement following its approval by the Food and Drug Administration.
Eisai, a partner of Biogen, has recently announced the successful development of an enhanced version of their drug Leqembi. The new formulation, which is administered through subcutaneous injections, has proven to clear 14% more amyloid brain plaques associated with Alzheimer's disease compared to the existing intravenous infusion method. However, patients receiving the subcutaneous version experienced slightly higher rates of ARIA, a potential brain swelling condition. Eisai clarifies that the sample size was too small to make accurate comparisons.
Eisai plans to submit the subcutaneous version of Leqembi for approval by March 2024. This marks an important step towards providing a more accessible and effective treatment for Alzheimer's disease.
In July, Biogen announced an ambitious cost-cutting program that aims to reduce its workforce by 1,000 employees. This initiative is expected to yield significant savings, with a projected net operating expense reduction of $700 million.
In conclusion, Biogen's upcoming earnings report is highly anticipated by analysts. Insight into the Leqembi launch, cost-cutting measures, and the company's future plans will likely shape market expectations and investor sentiment.
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