Biogen's good news gets a yawn on Wall Street

Biogen reported stronger-than-expected sales from its multiple sclerosis drug franchise, contributing to an even stronger boost to earnings in the second quarter and a guidance raise for the rest of the year. The market, however, was rather underwhelmed. Stifel analyst Paul Matteis called Biogen’s earnings report a “non-thesis changing beat and raise.”

Biogen’s lingering problems refuse to go away. Earnings were good, but were also boosted by a one-time tax benefit and lower operating expenses. Biogen isn’t spending a lot of money on Alzheimer’s disease clinical trials any longer — as you may have heard.

More importantly, sales of Spinraza, the company’s blockbuster treatment for the neuromuscular disease SMA, lagged expectations for the second straight quarter. Biogen management insisted the recently launched SMA gene therapy Zolgensma didn’t have a negative impact on Spinraza sales, but no one expects that to continue. If Zolgensma turns out to be a bust, Roche’s SMA pill — approvals coming next year — won’t be.

With Spinraza sales at risk and the multiple sclerosis drug Tecfidera facing the possibility of generic competition as early as 2021, Biogen is in desperate need for new growth. The company has a decent pipeline but it’s populated mostly with early stage (and risky) products. So, Biogen still has work to do.