(Bloomberg) -- Biogen Inc. raised its profit outlook after cost-cuts and faster sales of new drugs boosted second-quarter earnings.
The biotech company now expects 2024 adjusted earnings of $15.75 to $16.25 a share, 50 cents higher at the midpoint than its prior projection.
Adjusted quarterly earnings jumped 31% to $5.28 a share, the Cambridge, Massachusetts-based company said in a statement Thursday, surpassing analysts’ expectations. The sale of a priority review voucher, which companies can use to expedite a future drug approval, added 52 cents a share.
The results are a sign that Biogen’s strategy under Chief Executive Officer Chris Viehbacher is starting to work. Viehbacher, who took over in late 2022, has sought to bolster sales of new treatments, including a high-profile Alzheimer’s drug, make the company’s pipeline less reliant on risky neuroscience and slash operating expenses.
“Biogen has done what it said it was going to do,” Viehbacher said on a call with reporters. The company is “positioned for growth going forward,” he said.
In a note, RBC Capital Markets analyst Brian Abrahams said the results are “encouraging signs that Biogen can begin to turn the narrative around.”
A year ago, Biogen said it would cut 1,000 jobs — more than 11% of its workforce — and reduce operating expenses by an additional $700 million by 2025. The company said it expects to reinvest proceeds from sale of the priority review voucher into growth initiatives this year.
“We continue to believe that Biogen is making the right moves - including cost-cutting initiatives and exploring potential synergistic partnerships - to help it navigate a challenging period and return to more meaningful growth,” Truist Securities analyst Srikripa Devarakonda said in a research note.
Biogen’s shares rose less than 1% as of 9:47 a.m. in New York.
Leqembi Revenue
Sales of Leqembi, the Alzheimer’s drug developed in partnership with Japan’s Eisai Co., were about $40 million, an acceleration from about $19 million in the first quarter.
“We’re pretty convinced that Leqembi is on the right path now,” Viehbacher said.
Biogen is seeking a boost from Leqembi as sales of its mainstay multiple sclerosis medications decline. Leqembi, the first drug shown to slow progression of Alzheimer’s, the mind-robbing disease that afflicts some 6 million Americans, gained full US approval last year. Uptake has been slowed by logistical hurdles, however. Last week, European drug regulators rejected the drug, dealing a setback to the two companies as they face new competition. In July, US regulators approved a rival Alzheimer’s treatment from Eli Lilly & Co.
Viehbacher said the Alzheimer’s market is going to rapidly evolve and “only Leqembi is going to have the evidence base that covers that whole spectrum.” Lilly’s drug, he added, “is not going to be able to play in that.”
Biogen has also been searching for deals to add areas of growth. In May, the company agreed to acquire Human Immunology Biosciences Inc. for as much as $1.8 billion to bolster its pipeline of immune disease treatments. Last year, Biogen paid $7.3 billion to buy Reata Pharmaceuticals Inc., maker of Skyclarys, the first approved treatment for Friedreich’s ataxia.
Total second-quarter sales were $2.47 billion — little changed from a year ago, though above analysts’ estimates.
Sales of Skyclarys, which treats a rare degenerative disease in children, were $100 million, an increase from $78 million in the first quarter.
--With assistance from Robert Langreth.
(Updates with analyst and early share trading from eighth paragraph.)
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