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Will $125K drug boost Biogen results?

April 21, 2017

Wall Street will be keyed in Tuesday to Biogen‘s (BIIB) earnings for a first look at whether payer pushback hindered sales of Spinraza, the first drug approved for spinal muscular atrophy, which goes for $125,000 per treatment.

A Mizuho survey of 67 investors found that the Street generally expects Biogen to pull in $16 million in U.S. Spinraza sales for the first quarter and $186 million for the full year. That would be just a 6% chunk of projected total sales for the period.

Leerink analyst Geoffrey Porges says Spinraza coverage should have been a slam-dunk. But the $125,000 price per treatment — $750,000 in the first year and $375,000 in subsequent years — has payers balking, according to numerous reports.

Though Spinraza is approved for three types of spinal muscular atrophy, most payers are just covering the most severe form. The disease affects primarily infants and children, and causes muscle weakness and wasting.

Investors polled by Mizuho expect Spinraza to bring in $2.1 billion in peak worldwide sales. If Spinraza sales miss in the first quarter but show “solid” underlying demand for the drug, 68% of investors polled said they’d buy the stock.

Biogen is set to report its first-quarter earnings before the markets open Tuesday. For that period, analysts expect Biogen to report $2.74 billion in sales and $5 adjusted earnings per share, up 0.4% and 4.4% respectively.

Shares of Biogen have been consolidating since August. The stock has traded below its 50-day moving average since March 28. On the stock market today, Biogen ticked up 0.2% to close at 272.94.

Early Thursday, fellow biotechs Celgene (CELG) and Alexion Pharmaceuticals (ALXN) are set to announce their quarterly reports. Intraday, Celgene was down a fraction, near 122.35, as Alexion stock fell 1.7%, near 116.70.

Celgene investors will look for strong sales of Revlimid, Pomalyst and Otezla — Celgene’s biggest moneymakers — and potentially more commentary on ozanimod, a multiple-sclerosis drug in Phase 3 trials likely to rival Novartis‘ (NVS).

In 2016, chemotherapy drug Revlimid brought in 62.4% of Celgene’s total products sales, growing 20.2%. The FDA and the European Commission recently approved Revlimid as a maintenance treatment for patients with multiple myeloma, after a stem-cell transplant.

The Street could also look for commentary on Abraxane, a chemotherapy drug often used in combination trials. A recent trial, however, using Oncomed‘s (OMED) demcizumab and Abraxane in pancreatic cancer failed to meet its primary endpoint.

For the first quarter, analysts broadly expect Celgene to report $1.64 adjusted earnings per share on $3.04 billion in sales, up 24.2% and 21.1% respectively vs. the year-earlier period.

When Alexion reports early Thursday, investors will look for strength in sales of Soliris, an immunosuppressant approved to treat two immune system disorders — one which destroys red blood cells and the other which causes the formation of excess blood clots.

Alexion has three drugs approved. Soliris makes up the lion’s share of sales, bringing in 92.2% of revenue in 2016. Alexion is working to expand approvals for Soliris and just submitted applications in the U.S. and Japan to use Soliris to treat an autoimmune neuromuscular disease.

In March, UBS analyst Martin Auster called Alexion stock one to watch as the sector recovers in 2017. But Alexion stock is down 2.9% for the year and has traded below its 50-day moving average since mid-March.

For the quarter, analysts call for Alexion to report 18% year-over-year sales growth to $827.2 million and $1.23 a share in adjusted earnings, up 1% vs. last year.

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