In early-afternoon trading Tuesday, the biotech giant climbed 4% to $372.30 a share after the company reported second-quarter earnings that easily beat Wall Street estimates. The strong results come a few weeks after encouraging results for a new Alzheimer's drug caused shares to spike more than 20%.
The Cambridge, Massachusetts-based firm reported adjusted per share earnings of $5.80, beating analysts' expectations of $5.25, according to FactSet data.
Revenue increased by 9.1% to $3.36 billion from $3.08 billion a year ago, with the increase driven mostly by sales of Spinraza, the company's spinal muscular atrophy drug. Spinraza sales soared by 108% to $423 million globally as the number of patients who use the treatment increased substantially from the previous quarter.
Sales from its multiple sclerosis business unit declined by 2% to $1.09 billion compared to last year, but were partially offset by royalty payments from Roche Holding AG (ROG - Get Report) for their joint development of Ocrevus, a multiple sclerosis drug. Ocrevus sales jumped to $113 million from $18 million a year ago after it launched in 2018.
The decline in Biogen's MS revenue shouldn't detract from the company's overall strong performance, though, said William Blair analyst Matt Phipps.
"It's a legacy business," Phipps said. "It won't have any real growth anymore, but it's stable."
The strong showing from Biogen should reassure investors about its core business and should generate some excitement ahead of detailed results being released on Wednesday for BAN2401, the company's Alzheimer's drug, at the Alzheimer's Association International Conference in Chicago, Jefferies analyst Michael Yee wrote in a note to investors.
Initial results from mid-stage trials of Biogen's BAN2401 caused shares to pop earlier this month. Experts have said the promising data from the Phase 2 study are the most encouraging to date in the fight against Alzheimer's, which has proven to be a challenge for biotech and pharma firms to treat and represents a huge market opportunity.
Biogen raised its full year guidance to $24.90 to $25.20 a share from its previous estimate of $24.20 to $25.20. The company also increased its expected revenue to a range of $13 billion to $13.2 billion from $12.7 billion to $13 billion.
The revised guidance stems from management's optimism about the company's pipeline, CEO Michel Vounatsos said in a conference call. Biogen's strong second quarter performance was also cause for optimism about the company's forecast, he said.
Phipps said the new guidance is reasonable given the earnings beat.