(Reuters) – Biogen Inc reported better-than-expected second quarter profit and raised its 2019 earnings forecast on Tuesday, driven by higher sales of its top-selling multiple sclerosis drug Tecfidera and lower taxes.
Shares of the U.S. biotechnology company rose more than 5% to $244.74.
Tecfidera sales of $1.15 billion topped analysts’ estimates of $1.05 billion and accounted for nearly a third of second-quarter revenue of $3.62 billion.
But Wall Street’s focus has shifted to Biogen’s newer growth driver Spinraza, a treatment for a rare, often fatal muscular disorder called spinal muscular atrophy (SMA), particularly in light of the recent failure of Biogen’s leading experimental Alzheimer’s disease treatment.
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While Spinraza sales rose 15.4% from a year ago to $488 million, they fell short of lofty Wall Street estimates of $535.1 million, according to Refinitiv data.
The company said overseas sales of Spinraza came under pressure from a pricing adjustment in France, and as patients moved to a lower-priced maintenance dose from an induction dose in some mature markets.
The recent launch of Zolgensma, Novartis’ one-time gene therapy for SMA, is expected to further pressure Spinraza sales.
Biogen said it sees ample opportunity for growth as Spinraza has only reached 20% of adults in the United States.
“We believe Spinraza will remain a foundation of care in SMA for years to come,” Biogen research chief Michael Ehlers said.
Credit Suisse analyst Evan Seigerman said the Novartis treatment could begin to eat into Spinraza sales in 2020.
“In a vacuum, this quarter was good, but the results don’t solve a lot of our longer term concerns about the growth profile of the company,” he said.
In addition to the Alzheimer’s failure, Tecfidera is facing patent challenges and increased competition from newer treatments, such as Roche’s Ocrevus.
Biogen said it now expects 2019 adjusted earnings of $31.50 to $32.30 per share, up from its prior view of $28 to $29. Analysts were forecasting $29.70 per share.
Excluding items, Biogen earned $9.15 per share, breezing past analysts’ average estimate of $7.53. Much of the beat was due to lower costs and a tax rate of 14%, well below the expectation of 18% to 19%, analysts said.
Net income attributable to the company rose 72% to $1.49 billion in the quarter.
Reporting by Saumya Sibi Joseph and Manas Mishra in Bengaluru; Editing by Shinjini Ganguli and Bill Berkrot