Biogen on Wednesday beat Wall Street estimates for quarterly profit, but failed to ease investor concerns about long-term growth after it recently shelved the development of an Alzheimer’s drug that was expected to be its next blockbuster, sending its shares down 2 percent.
As the company’s lead products Tecfidera and Spinraza face near term challenges, analysts have called for “aggressive” business development measures to fill the void left by the discontinuation of aducanumab.
Biogen, during its post-earnings call, highlighted its pipeline opportunities and signaled that it was in a position to pursue M&A deals and late-stage opportunities.
“The plan A was always to prepare Biogen for growth even without aducanumab,” Chief Executive Officer Michel Vounatsos said. “I believe Biogen is set to rebound and I fundamentally believe we will be back.”
However, analysts remained unconvinced and said that the company did not provide specific plans for growth.
“I don’t think they’ve given investors a concrete path here that they’re moving the company forward,” Mizuho Securities analyst Salim Syed told Reuters.
The company’s growth driver Spinraza, used for treating spinal muscular atrophy, brought in $518 million in the quarter, beating Refinitiv IBES estimates of $486.4 million.
Spinraza is currently the only U.S.-approved treatment for the rare disease that can lead to paralysis, breathing difficulty and death.
However, looming competition from treatments such as Novartis AG’s Zolgensma and Roche’s risdiplam is expected to weigh on the long-term prospects for Spinraza.
Sales of Biogen’s top-selling multiple sclerosis drug Tecfidera came in at $999 million in the quarter, but narrowly missed consensus estimates.
The drug is facing patent challenges and losing market share to newer treatments like Roche’s Ocrevus, which is expected to outpace Tecfidera sales by 2021, according to Refinitiv.
Biogen said it expects a nearly $125 million reduction in operating expenses during the year related to the discontinuation of aducanumab, with net savings of about $80 million.
“Biogen’s management appears mostly inclined to deploy these savings and the rest of their excess capital for share repurchases rather than for transformative acquisitions,” SVB Leerink analyst Geoffrey Porges said.
Net income attributable to the company rose 20 percent to $1.41 billion, in the quarter ended March 31.
On an adjusted basis, the company earned $6.98 per share on revenue of $3.49 billion. Analysts had expected $6.87 per share on revenue of $3.39 billion.
Shares of the company fell 2 percent to $225.77 in morning trading.