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Biogen’s Hemophilia Drugs Could See Strong Revenue Growth

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Hemophilia drugs

On May 3, Biogen (BIIB) discussed its plans to spin off its hemophilia franchise into an independent, publicly traded company by the end of 2016 or in early 2017. The hemophilia franchise was part of Biogen in 2Q16.Graph 3The hemophilia drugs Alprolix and Eloctate have continued to garner market share, which reflects in Wall Street analyst projections for sales. In 2Q16, Alprolix is expected to earn revenues of around $78 million, which is a YoY (year-over-year) rise of about 43.3%. Eloctate sales are expected to reach $112.9 million in 2Q16, which would be a YoY increase of around 52%. To learn more about Biogen’s hemophilia franchise, see Biogen’s Hemophilia and Alzheimer’s Disease Portfolio.

If Biogen’s hemophilia drugs manage to reach these sales expectations in 2Q16, they could have a positive impact on the company’s share prices as well as the PowerShares QQQ (QQQ). Biogen makes up about 1.1% of QQQ’s total portfolio holdings.

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Spin-off rationale

Biogen is confident about the long-term potential of its hemophilia franchise, which comprises Alprolix and Eloctate as well as several promising investigational drugs. However, the company believes its neurology and hemophilia franchises target different physician and patient segments. So these franchises need to pursue different strategic initiatives specific to the needs of their target segments. A separate company with its own independent management and resources may be better-equipped to identify and pursue growth opportunities in the hemophilia segment. Plus, the independent company would have greater flexibility in determining capital structure and making capital allocation decisions that support its hemophilia franchise.

Biogen also expects the spin-off to introduce operating efficiencies for both companies. Finally, both Biogen and the spun-off entity will be in better position to respond to changing market dynamics in their respective segments.

The new company, with its promising hemophilia portfolio, is expected to present tough competition to other hemophilia players such as Novo Nordisk (NVO), Pfizer (PFE), and Shire (SHPG).

In the next part of this series, we’ll analyze analyst recommendations for Biogen prior to its 2Q16 earnings release.

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