Biogen Idec (NASDAQ: BIIB) will report earnings on Wednesday, January 29. The company's shares are up over 100% over the last twelve months, largely on the success of a new multiple sclerosis therapy that quickly elbowed past competition from both Sanofi (NYSE: SNY) and Novartis (NYSE: NVS) . Highly effective new hemophilia therapies likely to be launched ahead of Novo Nordisk's (NYSE: NVO) also have investors excited.
Before getting caught up in posted figures versus expectations, it's always a good idea to make your own assessment of a company's long-term prospects. Let's take a closer look at a few key factors that we can listen for during the call. This way we can cut through the noise and measure the company's chances of continued success.
Insider selling Before getting into critical factors that will affect Biogen's future profitability, we should address an issue that could cloud your judgement. You may have noticed news of insider selling at Biogen. This is true, but I don't think it's cause for alarm. As of January 23, 2014, five different directors, but not officers, have sold a combined 29,770 shares. The transactions represent just about 0.013% of total shares outstanding.
While it is certainly worth paying attention to insider transactions, viewed in context, I don't see any smoking gun here. At a recent price north of $310, the company's shares are trading at over 40 times trailing-twelve-month earnings. Generally in situations like these, without a real surprise to the upside, price gains made in anticipation of an earnings report are quickly wiped out. Given the odds, you can't blame insiders for taking some of their profits off the table beforehand.
Tecfidera launch Insider transactions aside, we should take a good look at what to expect regarding Biogen's main sources of revenue. First up is the wildly successful oral multiple sclerosis therapy Tecfidera. Introduced in the beginning of April 2013, after six months it had already beat out Sanofi's Aubagio, and Novartis's Gilenya in terms of market share. According to Biogen Idec CEO, George Scangos, there are about 8,000-9,000 prescribing physicians for MS in the US. Six months after its launch, Tecfidera had been prescribed by...
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