Second-quarter earnings season has been going for more than a week, and we’ve had a chance to hear from all four of the biggest companies in biotech as measured by sales, market valuation and clout.
Here’s what they had to say in their business updates, along with some commentary from analysts on how that squares with expectations and outlook.
Amgen
. The Thousand Oaks, Calif.-based biotech giant said its revenues reached $5.7 billion in the second quarter, a 6% gain over the same time a year ago. That was about $100 million more than analysts were expecting. The company, in turn, raised its profit guidance. Much of the financial gain came from price increases on its hit drug for autoimmune diseases, etanercept (Enbrel). U.S. sales are still languishing at around $20 million for its new cholesterol-lowering drug, evolocumab (Repatha). Brian Skorney, an analyst with Robert W. Baird, called it a “solid, uneventful” quarter. “In a year of disappointing earnings for some of the large-caps, Amgen appears to be the face of consistency. We are waiting to see what the company does next to fill the holes left by declines as biosimilar competition gets closer to eroding sales of the mainstay blockbuster products,” he wrote in a note to clients.
Biogen. Cambridge, Mass.-based Biogen packed some news into its second-quarter earnings report on July 21. CEO George Scangos announced he’s stepping down after six years on the job, and the company has authorized a plan to buy back shares to help prop up its slumping stock price. The company reported $2.9 billion in revenues in the second quarter, a 12% gain from the same period the previous year. Once again, the revenue increases were attributed to price increases on existing products in the U.S., as well as increasing prescription volume of its products outside the U.S. Leerink analyst Geoffrey Porges noted that three of the company’s four top executives have either left or announced plans to leave in the past 12 months, raising questions about where the company goes from here. Biogen shares have bounced up 10% since the better-than-expected quarterly report of July 21, but are still in negative territory, down 10% over the last 12 months. “We don’t envy Dr. Scangos’ replacement,” Porges wrote to clients. "As BIIB continues to double down on multiple sclerosis and Alzheimer’s, the new CEO will likely need to guide the company through a difficult decision tree ranging from pursuing a large acquisition to considering an outright sale."
Celgene
. Summit, N.J.-based Celgene kept on trucking, with its franchise cancer drug lenalidomide (Revlimid) generating 62% of its sales in the second quarter. Net product sales rang in at $2.74 billion, a 22% increase over the prior year. Revenues came in about 2% higher than Wall Street expectations, Leerink’s Porges said in a note. While Revlimid is the golden goose, Celgene is adding to its product lineup with cash from apremilast (Otezla), an oral pill designed to inhibit the PDE4 enzyme, which gives it an unusual way of working against psoriasis and psoriatic arthritis. Otezla, first approved by the FDA in March 2014, generated $216.8 million in U.S. sales in the latest quarter--a big jump over the $84.7 million it reported in the same period last year. The gains are “related to increased prescriber adoption and market share; at this rate, Otezla sales now approach ~$1B annually,” noted Mark Schoenebaum of Evercore ISI. Even though Celgene released disappointing results from a study of Revlimid for patients with diffuse large B-cell lymphoma, it still has ways to grow the old-fashioned way–by getting doctors to write more prescriptions. “Celgene delivered another strong quarter, extending its dominance as the large-cap biotech with the most sustainable (only?) volume growth,” Baird’s Skorney wrote.
Gilead Sciences
. Foster City, Calif.-based Gilead Sciences, after a historically great run with its hepatitis C drugs, saw its sales and profits decline in the second quarter. Total revenues were $7.8 billion in the last quarter, compared with $8.2 billion in the same period a year ago. Sales of hepatitis C drugs in the U.S. are under pricing pressure from payers and from competitors. Gilead lowered its fiscal 2016 revenue forecast by $500 million. Not good. Investors and analysts keep asking the company about when it’s going to get aggressive on the deal front. Many eyes were focused on the loot–a full $24.6 billion in cash on the balance sheet–which Gilead could use for a marquee acquisition, if it chooses. “Its internal pipeline does not seem to have the scope, or probability of success, to materially improve its outlook or offset what increasingly looks like a steadily eroding mountain of HCV revenue,” Porges said in a note to clients.
