1 Biotech's Clean Bill of Health

It's crunch time for Biogen Idec investors.

With the company preparing for the Food and Drug Administration's decision on its novel oral multiple sclerosis treatment, BG-12, Biogen first had to make its way through the hurdles of earnings season. The company's financials performed well through the first nine months of 2012, but investors finally were given the keys to the fourth-quarter data on Monday. How did Biogen perform -- and what should you take away from the latest earnings from this biotech star?

Hitting the numbers
On a purely financial basis, Biogen's quarter -- and more importantly, its full-year data -- was all right. While there's obviously more to the story than just the numbers, let's first review the data.

Biogen posted revenue of $1.42 billion for the quarter -- a jump of nearly 7% from a year ago that narrowly beat analyst estimates. That wasn't so bad, but adjusted earnings per share fell to $1.40, missing projections by $0.06.

Things looked more optimistic when reviewing the full-year data. For the entirety of 2012, revenues rose to $5.5 billion -- a 9% year-over-year gain built by rising sales of Biogen's Avonex and Tysabri drugs. Revenues from the former, the leading multiple sclerosis treatment in the U.S., jumped to $2.9 billion at 8% growth -- impressive for a blockbuster drug with already substantial sales figures. Tysabri revenues grew by 5% to $1.1 billion for the full year, helped out greatly by a fourth quarter where the drug's sales jumped 10%.

All in all, the data points to strong growth from Biogen's existing drugs in 2012 -- but a major change in the multiple sclerosis market should shake things up in the future.

BG-12 is the future
Injectable therapies for MS, such as Tysabri and Avonex, will soon be headed the way of the dinosaur. Oral treatments for the disease are the new wave of the future, and while Biogen might be late to the party, the company's ready with a new blockbuster on tap to fuel tomorrow's gains.

Biogen investors need to keep both eyes on March 28. That's the new PDUFA date of BG-12, Biogen's biggest hope in an MS market that's projected to grow to $15 billion by 2015. While the FDA delayed its original decision on BG-12, the drug's efficacy in clinical trials ensures that this regulatory approval looks like a mere formality. Investors certainly thought so after the earnings release, as shares jumped nearly 3% on BG-12's optimism (and the revenue gains) despite the EPS miss.

BG-12 isn't without competition. Novartis arrived in the oral MS treatment long before any other company with Gilenya, the forerunner in the industry that saw sales growth of an explosive 116% last quarter to $316 million. Sanofi has also beat Biogen to the game, scoring an FDA approval of oral MS therapy Aubagio late last year. Analysts are mixed on the drug's potential, but Aubagio's peak sales still range in the hundreds of millions of dollars in conservative estimates.

While BG-12 faces some tough competition, with peak sales of $3 billion possible, this drug commands investor attention. Earnings are nice, but BG-12's fate will dictate the future of Biogen.

Keep your eyes forward
Biogen had a decent quarter, but don't worry so much about the intricacies of the earnings report. The FDA will decide the company's future -- and all signs point to a successful approval for BG-12 come March 28.

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