Biogen lowers 2023 profit outlook on costs of Reata purchase

Biogen Inc. lowered its full-year earnings guidance on acquisition-related costs and predicted a smaller dip in sales after quarterly revenue beat analysts’ expectations.

Adjusted earnings for the year will be $14.50 to $15.00 a share, down from the earlier range of $15 to $16, Biogen said in a statement Wednesday. It expects a low-single digit percentage decline in annual revenue, instead of the mid-single digit drop previously flagged.

Third-quarter revenue rose just 0.9 percent as an 8 percent slide in drug-product sales was offset by a jump in contract manufacturing and royalty revenue. During the quarter, Biogen changed how it accounts for a collaboration with Eisai Co. on the Alzheimer’s drug Leqembi, with some costs now reported as expenses that were previously classified as a reduction to revenue.

Third-quarter adjusted earnings fell 8.6 percent to $4.36 a share, while sales of $2.53 billion beat the $2.4 billion average of analysts’ estimates.

The shares declined 3.9 percent at 9:40 a.m. in New York. They had fallen 11 percent this year through Tuesday’s close.

Biogen is cutting costs while broadening its focus to replace declining revenue from multiple sclerosis therapies, which made up more than half the drugmaker’s 2022 sales. Chris Viehbacher, the former Sanofi chief executive officer who took over at Biogen a year ago, plans to reduce the company’s dependence on risky neurology research without eliminating the ability to pursue hard-to-treat diseases, like Alzheimer’s.

“We have got the elements to think about a return to top-line growth,” he said in a call with reporters.“This had to be a complete recalibration and reallocation of resources within the company.”

Viehbacher’s biggest move came in July, when Biogen agreed to pay $7.3 billion for Reata Pharmaceuticals Inc., a maker of treatments for rare diseases. Biogen said Wednesday the deal, which closed in September, will shave about 75 cents off 2023 per-share earnings.

Reata’s Skyclarys was cleared for sale in the US earlier this year, the first approved treatment for Friedreich ataxia, a rare inherited degenerative disease that can impair walking and coordination in children as young as 5.

Investors are watching the launches of Skyclarys and Leqembi. Tokyo-based Eisai said Tuesday that it sees a significant increase in Leqembi sales in the current quarter, and aims for ¥10 billion ($66.4 million) in revenue from the drug in the year through March 2024.

Analysts expect a slow roll out of Leqembi — the first therapy to clearly slow the progression of Alzheimer’s — which must be intravenously infused at a hospital or clinic every two weeks. Eisai said last month that an injected version that could be given in patients’ homes appeared more potent than the current approved formulation — early findings that could pave the way to bolstering uptake.

Biogen has also partnered with Sage Therapeutics Inc. on the first pill for postpartum depression, which gained US approval in August. However, the drug was denied clearance as a treatment for major depressive disorder, a much larger commercial opportunity.

Biogen said in July that it would cut 1,000 jobs, or more than 11 percent of its workforce, and reduce operating expenses.