Please ensure Javascript is enabled for purposes of website accessibility

Wall Street’s Best Digest Daily Alert

In the past 30 days, seven analysts have increased their earnings forecasts for this drug maker.

In the past 30 days, seven analysts have increased their earnings forecasts for this drug maker.

Biogen Inc. (BIIB)
From Canaccord Genuity Research

We continue to watch Biogen Inc.’s (BIIB) multiple sclerosis (MS) franchise, potential business development moves closely. We are updating our model ahead of BIIB’s 4Q17 results, which the company will report before the market opens on 1/25/18 (Thursday).

Specifically, we are raising our price target from $340 to $350 primarily due to a lower tax rate assumption in 2018 and beyond. We remain constructive around business development on which BIIB has significant financial flexibility (we do not model any as-yet unannounced deals) and investor enthusiasm around BIIB’s high-risk/high-reward pipeline especially in the Alzheimer’s disease area.

We are also keeping a close watch on 1) the performance of BIIB’s core multiple sclerosis franchise (69% of our 2018E revenue), which is facing some competitive threats from others’ products (brand and generic); and 2) the performance of Spinraza (spinal muscular atrophy, SMA) for details that could further inform our view.

We are adjusting our model to account for the impact of lower tax rates in the US. Recall that at a recent investor conference, management cited a ~200bp favorable impact on tax rates in 2018+. We also made modest tweaks to our revenue and expense estimates. Our 4Q17E revenue and non-GAAP EPS estimates are $3.06bn and $5.75, respectively, which compares to consensus of $3.08bn and $5.55 (based on FactSet). We note EPS consensus may be noisy due to some non-GAAP charges related to some pipeline-related announcements made in the quarter.

Outlook for 2018, SMA, MS, and biz dev—potential areas of focus on 4Q call Apart from issuance of the company’s 2018 financial outlook, we believe investors could focus on: 1) the ongoing launch of Spinraza, which has been promising so far; 2) performance of BIIB’s core MS franchise and details around plans to defend that; 3) BIIB’s gene therapy for SMA, which the company expects to advance into the clinic in mid-18, while competitor Avexis moves ahead with its gene therapy (AVXS-101); 4) Alzheimer’s disease pipeline (BIIB has not commented on potential availability of interim data on aducanumab); and 5) upcoming Phase 2b results of Tysabri in stroke that are expected soon.

We also believe investors will continue to look for more color around potential business development activity.

Sumant Kulkarni, Canaccord Genuity Research,, January 17, 2018