Biogen looks to Alzheimer's drug to help rebound from Tecfidera losses

Biogen Inc. is hoping that U.S. approval of its Alzheimer's therapy aducanumab will make up for a loss of multiple sclerosis drug sales, executives have said in the wake of a 22.3% year-over-year drop in fourth-quarter 2020 revenue.

During a Feb. 3 earnings call, Biogen executives said the drop in fourth-quarter revenues to $2.85 billion from $3.67 billion the previous year was primarily due to the entry of generic competitors to the company's blockbuster multiple sclerosis drug Tecfidera in the U.S.

Sales of Tecfidera in the U.S. were $319.7 million for the quarter, a decline of 63.5% from $877 million for the same period in 2019, while global revenue from the drug for the full year 2020 fell 48% versus the prior year to $3.84 billion. Sales of the company's spinal muscular atrophy drug Spinraza also saw declines in the fourth quarter with worldwide sales dropping 8.3% year over year to $498 million.

Biogen CFO Michael McDonnell said the erosion of Tecfidera sales in the U.S. has actually been slower than anticipated, but if the company loses legal appeals regarding its patent, it could see much sharper declines in the first half of 2021.

The Cambridge, Mass.-based company is counting on approval for its Alzheimer's candidate aducanumab, co-developed with Eisai Co. Ltd., to make up for some of these losses in the coming years.

"Our guidance assumes aducanumab will be approved in the U.S. by June 7, although uncertainty remains on the FDA's decision. If aducanumab is approved in the U.S., we would expect an immediate launch," McDonnell said. "However, dose titration will result in less revenue per patient in the initial months of treatment. As a result, we would expect only modest revenue for aducanumab in 2021, ramping thereafter."

The U.S. Food and Drug Administration recently extended the review period for the drug by three months after the companies provided new data that required further analysis. There had previously been doubts that the agency would green light the drug after an advisory committee overwhelmingly voted against approval in November 2020.

The company anticipates 2021 revenues will be between $10.45 billion and $10.75 billion, with non-GAAP diluted EPS of between $17 and $18.50. RBC Capital Markets analyst Brian Abrahams said in a Feb. 3 note that the guidance was "disappointing" as it was well below consensus estimates and represents the investment required for aducanumab and a conservative view of the rest of the business.

The investments for aducanumab include manufacturing capabilities, and McDonnell said the company has allotted most of its capacity to producing the Alzheimer's candidate.

Biogen could soon face competition for aducanumab, as recent results demonstrated that Eli Lilly and Co.'s own Alzheimer's candidate donanemab helped slow decline in cognition and daily functions by 32% in a mid-stage study.

However, Biogen Chief Medical Officer Alfred Sandrock said the positive results from Lilly also reflect well on Biogen's efforts.

"I think it adds to the body of evidence that suggests that targeting amyloid with the right antibody that gets to the plaque and removes plaque is the right approach," Sandrock said.

Aside from aducanumab, executives said there are other areas of potential growth for the company, and they anticipate eight data readouts in 2021 for pipeline products, including phase 3 data for nervous system disease drug candidate tofersen and phase 2 data from a second Alzheimer's candidate, gosuranemab. The company also recently agreed to a $1.53 billion licensing deal with Sage Therapeutics Inc., which will give it access to two potential products to treat depression and movement disorders.

"Obviously, aducanumab is the catalyst, but we do believe that we have the ability to grow the company for the longer-term based on what we have in the pipeline," McDonnell said.

One drug candidate that will not be pushing the company forward, however, is BIIB054, which had been lined up as a potential treatment for Parkinson's disease. Biogen has decided to discontinue development of the drug after a phase 2 study showed it did not meet any of the company's primary or secondary endpoints.

Financial results

Biogen's non-GAAP net income attributable to the company for the fourth quarter of 2020 was $705.7 million, a decline of 52.5% year over year. Non-GAAP EPS was $4.58, a fall from $8.34 in the prior-year period and lower than the S&P Capital IQ non-GAAP EPS estimate of $4.76.

Non-GAAP EPS for the full year 2020 was $33.70, up slightly from $33.57 in the prior year, while full-year non-GAAP net income was $5.44 billion, a decline of 13.5% from $6.29 billion in 2019.

Revenue for the full year 2020 was $13.44 billion, a decline of 6.5% from $14.38 billion in the prior year.

The S&P Capital IQ non-GAAP EPS estimate for the full year 2021 is $33.75.