Biogen Idec Inc.'s (BIIB) first-quarter profits rose 35% on
growth of its multiple sclerosis drug portfolio, but that
performance was trumped by important new data on its oral MS
treatment BG-12.
The new data showed the drug's strong effectiveness for the
first time, as it did a better job of preventing relapses of
debilitating disease than a key rival. The news should position the
drug well in the increasingly competitive MS treatment market,
possibly giving it a leading position among emerging oral
treatments. It could be available to patients as early as next year
after a second study is completed later this year.
The news sent Biogen's stock surging, recently trading up 22% to
$105.73, by far its highest level ever on a split-adjusted basis.
Meanwhile, shares of Teva Pharmaceutical Industries Ltd.
(TEVA)--which is developing a oral MS drug laquinimod--fell 8.8% to
$44.85, a new 12-month low for the stock.
Chief Executive George Scangos said on the company's earnings
conference call that the drug cut relapses by 49% after two years,
compared to a placebo, with an annual relapse reduction rate of
53%. The treatment also reduced the progression of disability by
38%, when using a standard measurement. The company said it had a
favorable safety profile.
The drug would add to Biogen's MS drug portfolio, which
represented 74% of the company's 2010 revenue. Biogen, over the
past year, has re-focused the company around developing neurology
treatments and its current MS drugs.
Goldman Sach analyst Sapna Srivastava said BG-12 "meaningfully
strengthens the sustainability of BIIB's core multiple sclerosis
franchise." Leerink Swann analyst Joshua Schimmer added that Biogen
is now "poised to dominate MS."
Multiple sclerosis is a chronic, inflammatory condition that
occurs when the body essentially attacks its own central nervous
system and can be disabling in advanced stages. Biogen's BG-12 was
tested in the relapsing, remitting form of the disease, which has
flare-ups of the disease rather than consistent progression, and
comprises the majority of MS cases. Relapse rate and disability
progression are the most common measures of a drug's effectiveness
in the disease.
Currently, most MS drugs are given by injection or with
intravenous infusion, but the market is getting more competitive
and numerous oral drugs are on the horizon. Novartis AG (NVS
NOVN.VX) sells Gilenya, the first and only approved MS pill.
Among the most popular treatments are beta-interferons, which
reduce disease flare-ups, including Biogen's Avonex, Bayer AG's
(BAYRY) Betaseron, and Rebif, which is marketed by Pfizer Inc.
(PFE) and Germany's Merck KGaA (MRK.XE).
Teva Pharmaceuticals also makes Copaxone, which seems to fight
the nerve-attacking immune cells characteristic of MS by acting as
a decoy. Biogen and partner Elan Corp. (ELN, ELN.DB) also sell
Tysabri, which prevents the immune cells from leaving the blood
stream so that they can't get to the brain or spinal cord.
Last week, data on Teva's oral MS treatment showed it reduced
the annual relapse rate in patients taking the drug was reduced by
23%, while disability progression fell by 36%. Teva's pill is taken
once-daily, compared to Biogen's twice-daily drug.
"Our excitement for laquinimod hasn't changed," said Jon
Congleton, vice president and general manager of Teva Neuroscience,
in an interview. He stressed that it is difficult to compare data
in different clinical trials because of multiple variables that can
affect the outcome.
Biogen, like Teva, lost fast-track designation from the Food and
Drug Administration for its MS pill. The agency had originally
granted the quicker review to the drugs based on an unmet medical
need of not having any oral MS treatments on the market, but that
changed with the approval of Novartis's Gilenya.
Overall, the quarterly results from the Weston, Mass., biotech
beat analysts' expectations as total revenue rose 8.5% on sales of
MS drugs Avonex and Tysabri, sold with Elan Corp., which got boosts
in the quarter from December price increases. Biogen is highly
dependent on the drugs, responsible for 74% of its revenue in
2010.
In the quarter, Biogen's net income rose to $294.3 million, or
$1.20 a share, from $217.4 million, or 80 cents a share, a year
earlier. Excluding items, such as restructuring charges, per-share
earnings were $1.43 a share, exceeding expectations of $1.41 a
share, according to Thomson Reuters.
Revenue was $1.2 billion, beating a projection of $1.18
billion.
The company also backed its 2011 financial projections. It had
previously projected full-year earnings of more than $5.70 a share
and revenue growth for the year "to be between flat and low single
digit" from last year. Analysts currently project the company
earning $5.87 a share on revenue of $4.78 billion.
In the first quarter, sales of Biogen's flagship product Avonex
rose 8% to $642 million, coming close to Wall Street expectations
of $645 million, according to ISI Group.
During the quarter, sales of Tysabri rose 20% to $349 million,
beating average analyst expectations of $337 million. Revenue
collected by Biogen rose 15% to $251 million. About 58,400 patients
were using Tysabri at the end of March, up from 56,600 at the end
of December.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com