Tag Archives: biib

Biogen Spinning Off Hemophilia Business As Competition Heats Up

Big biotech Biogen ( BIIB ) said Tuesday that it will spin off its hemophilia business into an independent company in a move much anticipated by Wall Street. Biogen, which focuses mainly on neurological diseases, got into hemophilia with the 2014 launch of its two long-acting infusion treatments, Eloctate and Alprolix, for hemophilia A and B, respectively. It carved out some market share from leader Baxter International ( BAX ), but in mid-April press reports relayed rumors that Biogen was thinking of selling or spinning off the business. Baxter had already made a similar move when it spun off its hemophilia-focused biopharma arm as Baxalta ( BXLT ) last July. Baxalta was quickly snapped up by Shire ( SHPG ) in a $32 billion deal. Both Baxalta’s and Biogen’s infusion therapies are under potential threat from new gene therapies that might be able to cure the disease with a one-time treatment, or at least manage it with far fewer treatments. BioMarin Pharmaceutical ‘s ( BMRN ) early-stage trial results for its hemophilia gene therapy , reported last month, supported the method’s potential. Biogen’s press release mentioned that investment in research was one rationale for the spinoff. “The new company, to be named at a later date, will focus on the discovery and development of therapies for the treatment of hemophilia,” said the release. “The new company plans to bring longer-acting therapies utilizing the XTEN technology into clinical development in the first half of 2017 and to accelerate the development of bispecific antibodies and hemophilia-related gene therapy programs.” It added that the spinoff will also enable the remaining portion of Biogen to focus on its core multiple-sclerosis business, which has been struggling lately as shown in Biogen’s Q1 earnings  last month. Still, RBC Capital Markets analyst Michael Yee found the decision a bit puzzling. “Why would Biogen want to remove a growing and profitable, long-IP-duration biologics business that diversifies  Biogen and ‘dilutes’ the EPS when it’s removed?” he asked in a research note. “In addition, Biogen is not selling the business and bringing in cash (approximate $4 billion to $6 billion valuation), and prior to today, the question was what would they do with that cash and who would they buy (they aren’t getting cash in this deal). So this seems odd and perhaps implies the valuation is not what the Street perceives if a buyer was not willing to pay up.” Biogen stock was up a fraction in early trading on the stock market today , near 275. The stock has found support above its 50-day line.

Biogen Q1 Earnings Beat Estimates, But Sales Miss; Stock Climbs

Big-cap biotech Biogen ( BIIB ) reported a mixed first quarter Thursday morning, and its depressed stock rose in early trading. Biogen posted Q1 earnings of $4.79 a share excluding one-time items, up 25% from the year-earlier quarter and 32 cents above analysts’ consensus, according to Thomson Reuters. Revenue rose 7% to $2.73 billion, about $20 million below Wall Street’s average estimate. Biogen did not change its full-year guidance of $11.1 billion to $11.4 billion in revenue. The shortfall came mainly in sales of multiple-sclerosis drugs, which is also Biogen’s core business. Oral drug Tecfidera grew 15% to $946 million, about $15 million short of consensus, according to Evercore ISI. Interferon products Avonex and Plegridy together sold $670 million, down 11% from Q1 2015 and more than $50 million below consensus. “The shortfall was increased by $40 million in channel inventory reduction, but also included the effect of further rebates to payers in an increasingly competitive category,” wrote Leerink analyst Geoffrey Porges in a research note. “The company’s reported EPS of $4.79 beat consensus … as the company trimmed their R&D expenses more than anticipated.” Biogen’s competition in MS comes mainly from Novartis ( NVS ) and Sanofi ( SNY ), and it might soon get more competition from Roche ‘s ( RHHBY ) ocrelizumab, which is nearing an FDA filing after performing well in clinical trials. Analyst Max Jacobs of Edison Investment Research was more blunt, calling Biogen’s Q1 “an awful quarter” that will likely bring a guidance reduction down the road. “While operating expense control helped save the quarter from an earnings standpoint, management will likely be under pressure from investors to do something drastic to right the ship,” he wrote in a research note. Biogen stock was nonetheless up 4% in early trading on the stock market today , near 277. It’s still down more than 40% from its lifetime high, hit in March 2015, as the company’s MS franchise first started showing weakness last year.

Allergan, Pfizer Strike Off Down Separate Paths After Merger Killed

Big pharma Pfizer ( PFE ) contemplated splitting itself, while specialty drugmaker Allergan ( AGN ) campaigned to regain investor confidence Wednesday, after the two companies announced that their planned merger was off. Pfizer early Wednesday confirmed rumors that the companies had canceled their $160 billion merger, two days after the Treasury Department released new guidelines that would have removed most of the tax benefits of the deal for New York-based Pfizer. After its stock tanked Tuesday, Allergan’s CEO went on a media blitz to promote his company’s prospects as a stand-alone. On a conference call with analysts Wednesday morning, Allergan CEO Brenton Saunders maintained that Treasury’s action against tax inversions  will have no impact on the stand-alone Allergan, which redomiciled to Ireland through an inversion deal with Warner Chilcott three years ago. The company will retain its 14% corporate tax rate, he said, and it should also be free to deploy capital however it chooses. Saunders also said Allergan’s $40 billion sale of its generic unit Actavis to Teva Pharmaceutical Industries ( TEVA ) is unaffected by the spiking of the Pfizer deal  and is on track to close in June. The timeline for that buyout was delayed from its original Q1 closing date, as Teva works its way through a multi-country regulatory clearance process, but Saunders said the two companies are determined to get it done. “Teva is doing a lot of work,” said Saunders. “They’ve restructured their company; they have named their entire leadership through a few levels that include 200 Allergan executives moving to Teva. … This is a great deal for Allergan, but also a great deal for Teva.” Allergan stock, down 15% Tuesday, rebounded 3.5% Wednesday, to 244.74. Teva stock rose 4% to 56.73. Allergan Hunts For Growth Assets The closing of the Actavis sale should give Allergan a big wad of cash, so many of the analysts’ questions on the call related to what it will do with the money. Several seemed to be rooting for share buybacks, given that Allergan stock is trading near a 52-week low in the wake of the Pfizer breakup. Saunders said all options are on the table, but he emphasized that Allergan’s “growth pharma” model means that it’s constantly on the hunt for growth assets. He said that Allergan’s business-development team has stayed active since the Pfizer deal was announced, and if the right opportunity came along “we could announce it tomorrow.” A couple of analysts raised the name of contact-lens giant Bausch & Lomb, with which Saunders has a personal history. He headed the company from 2010 until 2013, when it was sold to Valeant Pharmaceuticals International ( VRX ) for $8.7 billion. Given Valeant’s recent spectacular crackup , many on Wall Street have speculated that B&L might again go on sale, with Allergan a suitable buyer not only because of Saunders, but also because of Allergan’s large ophthalmology business. Saunders’ response to this seemed to be a swipe at Valeant’s infamously opaque financial reporting. “It sold for $8.7 billion three, four years ago, with a late-stage pipeline of 30-some programs, and a strong organic growth profile,” he said. “I can’t tell that any of those things today are still true. Based on public information, it’s impossible to tell that it’s worth more than it sold for four years ago.” Pfizer Split-Up Could Move Up Pfizer, meanwhile, rose 5% to 32.93, hitting a four-month high, as investors looked toward another possible major catalyst for its stock. Back in 2013, the company reorganized so that it would be able to split its innovative drug-development business from its established products, and perhaps divide itself into more pieces if necessary. The company had originally planned to make a decision on that this year, but when the Allergan buyout was announced, the issue was pushed into next year. In Pfizer’s press release announcing the end of the Allergan deal, however, it said the decision date is back to this year. That itself could bring some more M&A, writes Evercore ISI analyst Mark Schoenebaum. “After a recent acquisition of Hospira, Pfizer probably has critical mass to transform its Global Established Products business unit to an independent company, but Innovative Products business units might benefit from additional assets acquired from outside,” Schoenebaum wrote in an email to clients. The prospects of both companies going back on the hunt may have been what lifted drug stocks as a whole Wednesday, especially biotechs. Distressed big-cap biotech Biogen ( BIIB ), which has been subject to buyout speculation given that it’s trading 35% off its high, rose 5.3% to 279.57. Smaller Anacor Pharmaceuticals ( ANAC ) rose 16% to 73.20, likely because its late-stage eczema drug is seen as a fit for Allergan’s dermatology portfolio.