Associate Managing Editor

Biogen Inc. and partner Elan Corp. plc released disappointing Phase III data on Antegren in an induction trial in Crohn's disease, dragging both companies' stocks down and overshadowing positive second-quarter figures for Biogen.

The Antegren trial, called Enact-1 (Evaluation of Natalizumab in Active Crohn's Disease Therapy-1), did not meet its primary endpoint of a response - a 70-point decrease in the Crohn's Disease Activity Index at week 10 - although it did show biological activity similar to what was seen in earlier Phase II work. Secondary endpoints were response and remission (an index score of less than or equal to 150) at other time points through week 12. Although efficacy was seen in those endpoints, the missed primary endpoint hurt Biogen and, to a larger degree, Elan.

Biogen's stock (NASDAQ:BGEN) fell $2.48 Thursday to close at $38.70, while Elan's stock (NYSE:ELN) dropped $1.99, or 30.8 percent, to end the day at $4.47.

"We consider the failure in Crohn's a setback and have removed all Crohn's estimates (starting in 2005) from our model," Eric Schmidt wrote in a note for New York-based SG Cowen Securities Corp. "Perhaps Antegren's only chance at near-term approval is if the Phase III induction data show a benefit in the Remicade-refractory subpopulation," data for which have not yet been disclosed.

The side effects in the treatment arm were comparable to the placebo arm through week 12, but both companies pointed to a high placebo rate in the total population of 905 patients as the potential spoiler. Analysis of the data continues.

"It is worth noting that high placebo response rates have recently been observed in other Crohn's disease studies," Lars Ekman, president of research and development at Elan, said in a conference call. "The unexpected high rate might be attributed to the study design - the 4-1 randomization ratio might have led patients to believe they would be assigned to the active treatment arm and thus experience a beneficial effect from the treatment."

The companies have a maintenance trial, Enact-2, under way and Ekman said in the call that they have enrolled enough patients to power the study to its endpoints. The trial will evaluate patients beyond Enact-1 for another 12 months. Data are expected by the end of the second quarter next year.

While some analysts were calling Antegren in Crohn's a failure, the companies said a complete analysis would tell more and they are still planning to move ahead, although just how is not yet clear.

"Elan and Biogen will meet with regulatory authorities, the FDA in particular, to discuss the Phase III data and determine the most appropriate path forward in light of the data we are aware of," said Burt Adelman, executive vice president of research and development at Cambridge, Mass.-based Biogen, adding that he thought it would "only take one meeting with perhaps a little follow-up to have a path forward."

Elan, of Dublin, Ireland, and Biogen also have Antegren in two multiple sclerosis Phase III trials - Affirm (Natalizumab Safety and Efficacy in Relapsing-Remitting MS) and Sentinel (Safety and Efficacy of Natalizumab in Combination with Avonex [interferon beta-1a] in Patients with Relapsing-Remitting MS). Adelman said a regulatory filing is expected in 2005, if all goes well, and the earliest the data might filter out from the trial is in the fourth quarter next year.

Earnings Driven By Avonex; Amevive Brings In $7M

Biogen reported net income of $58 million for the quarter ended June 30, a 33 percent increase over 2002's second quarter. Earnings per share were 38 cents, beating The Street's consensus estimate of 36 cents.

The company had total revenues of $326 million for the quarter - a 21 percent increase over the same quarter in 2002. The multiple sclerosis drug Avonex was the heavy contributor, bringing Biogen $286 million, up 14 percent. Of that, U.S. sales were $196 million. The company also pulled in $31 million in royalty payments and received $7 million from its psoriasis drug, Amevive. While the bad news of the day was the Antegren trial results, some analysts had figured on more from Amevive.

Although Biogen management said Amevive was in line with its projections, "we believe sales came in below most analysts' expectations, including our own," wrote Schmidt.

However, William Tanner, with Leerink Swann & Co. in Boston, had estimated $6 million in Amevive sales in the second quarter and - with Biogen estimating between $50 million and $70 million in full-year sales - Tanner sees sales falling near the middle, at $59 million.

Biogen reconfirmed its full-year guidance, expecting earnings per share to be from $1.72 to $1.85. The company had $857.9 million in cash and marketable securities as of June 30 and used about 151.5 million shares outstanding to calculate its diluted earnings per share.

Still, though, the biggest thing on Biogen's horizon is its pending merger with IDEC Pharmaceuticals Corp., of San Diego. Announced in June, the merger will create the third-largest biotechnology company in the U.S., behind Amgen Inc., of Thousand Oaks, Calif., and Genentech Inc., of South San Francisco. The combined pipeline could drive Biogen IDEC Inc. to impressive growth. (See BioWorld Today, June 24, 2003.)

"[Biogen IDEC] management expects Biogen IDEC to achieve 15 percent annual revenue growth and 20 percent annual EPS growth for the period of 2003-07," Schmidt said, but he cautioned that "the combined company lacks the top-line visibility offered by other biotech stocks. An inflection in Rituxan [IDEC's product] and/or Amevive sales or a possible biologics license application filing on Antegren in multiple sclerosis could increase investor confidence in the company's growth prospects."