Biogen: Earnings Beat Expectations, Maintaining Current Fair Value Estimate

In the pipeline, we’re bullish on aducanumab and nusinersen. We have a 65% probability of approval assigned to spinal muscular atrophy drug nusinersen, and with enrollment complete in phase 3 studies, we expect data in early 2017. In Alzheimer’s, we expect safety data from the new titration scheme for aducanumab later this year that should reassure investors about its safety profile. If Eli Lilly’s solanezumab data (late 2016) is positive, it should have a positive impact on Biogen’s share price, regardless of the readthrough to aducanumab’s mechanism of action, as investor sentiment on drug industry pipeline productivity would improve.

Biogen's multiple sclerosis franchise looks stable, and cost-cutting efforts and share buybacks will boost the bottom line. Biogen's top line grew 12% in the quarter, with 9% growth in the MS business coming from U.S. price increases and ex-U.S. Tecfidera volume. Given higher cost of goods due to inventory write-offs, non-GAAP net income growth was 15%, despite significant efforts to slow other operating expense growth. Share buybacks pushed non-GAAP EPS growth to 23% in the quarter.

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