July 28, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Analysts continue to speculate on whether Cambridge, Mass.-based Biogen may be a takeover target after the company reported a disappointing second quarter and lowered its full-year guidance.
To be fair, Biogen’s second-quarter earnings report was not that clear cut. The company reported revenues of $2.6 billion, an increase of 7 percent compared to the second quarter of 2014. The company’s six-month earnings were $5.2 billion, up from $4.6 billion in 2014.
The company’s biggest products are therapies for multiple sclerosis (MS), which is where some of the issues originated. Overall, MS product sales increased from $2.0 billion in the second quarter of 2014 to $2.1 billion this year. Tecfidera rose from $700 million in the second quarter of 2014 to $883 million this year. At least part of the issue is analysts were expecting quarterly sales of $909 million instead of $883 million for Tecfidera.
However, sales of interferon products, Avonex and Plegridy, dropped from $774 million last year to $690 million in the second quarter of this year. Tysabri dropped from $533 million in last year’s second quarter to $463 million this year.
Tecfidera, Avonex and Tysabri account for 81 percent of Biogen’s revenue in 2014.
The company also modified its annual guidance, decreasing its expected revenue growth to 6 to 7 percent for 2014, and earnings per share to be between $14.25 and $14.70, also a decrease. The prior guidance had sales growth at 14 to 16 percent with EPS of $16.60 to $17.
However, Biogen has a cash stockpile of $4.5 billion. Analysts point out that the company could use that cash to buy another company or to repurchase stock.
Some analysts speculate that Biogen might pick up a company, which might help fend off any potential acquisitions. Isis Pharmaceuticals (ISIS) is one target that has been mentioned, although Receptos , Neurocrine Biosciences , Acadia Pharmaceuticals have also been considered. Also mentioned are Sarepta Therapeutics and Bluebird Bio .
“We are in a world of eat or be eaten,” said Eric Schmidt, an analyst with Cowen & Co. to the Boston Globe. “If they don’t deploy their cash efficiently or properly, there’s always a chance that somebody may come in and monetize their assets for them.”
’s recent movements have been behind some of the speculation. On July 20, 2015, shares traded for $408.93 and plunged on July 24, 2015 to $300.03. In the last year, shares spiked on March 20, 2015 at $475.98, up significantly from a Nov. 20, 2014 of $299.53. Shares are currently trading for $312.07.
The most recent loss, related to the change in the company’s annual guidance, got analysts speculating.
“Historically, big companies have shown a heightened sense of smell when blood is in the water,” said Cory Kasimov, an analyst with JPMorgan Chase & Co. in a note to investors. “If a mega-cap company comes to the conclusion that Biogen’s pipeline of potential needle-moving assets comes cheap,” they may come calling.
One potential buyer could be Allergan Plc , which announced on Monday that it was selling its generic drugs unit to Teva Pharmaceutical Industries Ltd. for $40.5 billion. In a conference call with investors, Allergan’s Brent Saunders, chief executive officer, indicated the company might make a big purchase within 18 months.
