Biogen’s (BIIB) revenues from multiple sclerosis (or MS) drugs increased by a modest 1.3%, from $2.3 billion in 1Q14 to $2.6 billion in 2Q15. While Biogen’s blockbuster drug Tecfidera displayed lower-than-expected revenue growth, the company managed to demonstrate strong performance for other MS drugs such as Plegridy and Tysabri.
Avonex was approved by the Food and Drug Administration (or FDA) in 1996. In August 2014, Biogen introduced Plegridy, a long-acting improved form of Avonex. While total sales of Avonex declined by 20.5% from $774 million in 2Q14 to $615 million in 2Q15, Plegridy has continued to display steady patient uptake. The company expects Plegridy to cannibalize Avonex’s sales as patients switch to a better version of the same drug. Although the switch doesn’t benefit the company in the short term, it’s supposed to boost Biogen’s revenues in the long run.
Although the price of both drugs is similar, Plegridy must be injected in the MS patient once every two weeks while Avonex has to be injected once a week. The reduced dosage frequency is expected to boost Plegridy’s sales and help the drug win market share from rival drugs such as Merck’s (MRK) Rebif, Bayer Healthcare’s Betaseron, and Teva Pharmaceuticals’ (TEVA) Copaxone. To learn more about treatment therapies for MS, please refer to The Biotechnology Industry and Multiple Sclerosis Therapies.
Tysabri is also a key product, originally co-marketed by Biogen and Elan Pharmaceuticals. However, it was taken off the market in 2005 when a severe brain-related infection was linked to the drug. The drug was reintroduced in the market in 2007.
Tysabri registered revenue decline of about 13.1%, from $533 million in 2Q14 to $463 million in 2Q15. The drug initially lost market share both in the United States and in Europe, as MS patients switched to Biogen’s oral drug Tecfidera. However, the drug has recorded stable revenues of about $463 million both in 1Q15 and 2Q15. As the drug has been effective for alternative treatments such as moderate to severe Crohn’s disease, it’s expected to register positive revenue growth in future.
In April 2015, Biogen and its collaboration partner, AbbVie (ABBV), filed an application with the FDA for approval of Zinbryta. The later-stage clinical studies of this drug show it to be more effective than Biogen’s Avonex, one of the most prescribed drugs for relapsing remitting multiple sclerosis (or RRMS).
Investors can get diversified exposure to Biogen while reducing company-specific risks by investing in the iShares NASDAQ Biotechnology ETF (IBB). IBB holds 7.48% in Biogen stock.