Staff Writer

Biogen Idec Inc. ended its third quarter with $543 million in revenues, slightly lower than analyst estimates, as it nears the one-year anniversary of a merger that made it the world's third-largest biotech company.

The Cambridge, Mass.-based company reported non-GAAP earnings per share of 37 cents and net income of $132 million, compared with 35 cents and $123 million for the quarter last year. Analysts' consensus estimate for the quarter was 35 cents.

However, on a GAAP basis net income was $36.8 million, or 10 cents per share, mostly due to $112 million in expenses from last year's merger of Biogen Inc. and Idec Pharmaceuticals Inc.

In a conference call Thursday, the company reiterated its plans to launch Antegren for multiple sclerosis later this year upon FDA approval, anticipated in late November.

"The acceleration of Antegren has impacted virtually every function in the organization," said William Rohn, the company's chief operating officer. "We spent the summer conducting marketing research and finalizing our strategic plans. The fall has been concentrating on execution of these plans."

Aside from its anticipation of an Antegren launch, the company saw increases in the third quarter for its two key marketed products, Avonex and Rituxan, but a decrease in the sales of Amevive, while Zevalin sales remained somewhat level.

"Avonex grew 16 percent year over year, representing the fourth consecutive quarter of strong double-digit worldwide growth," said James Mullen, the company's CEO.

Avonex, for relapsing forms of MS, had sales of $346 million, while Rituxan, for certain B-cell non-Hodgkin's lymphomas, brought the company $160 million, an increase of 19 percent. While U.S. Rituxan sales for the quarter were $393 million, Biogen Idec shares them with partner Genentech Inc., of South San Francisco, and Biogen Idec also received $33 million in royalties for sales of Rituxan outside the U.S.

Amevive, the company's treatment for moderate to severe psoriasis, fell from sales of $12 million in the third quarter of 2003 to $8 million this year. Jennifer Chao, an analyst with New York-based Deutsche Bank Securities Inc., said "patient penetration continues to be an uphill battle" for Amevive, possibly due to the strong performance of Enbrel, which is developed for psoriasis by Thousand Oaks, Calif.-based Amgen Inc. The competition will intensify, she said, with Centocor Inc.'s Remicade and Genentech's Raptiva.

Biogen Idec's fourth marketed product, its non-Hodgkin's lymphoma radioimmunotherapeutic agent Zevalin, had sales of $5 million in the third quarter, up from $4 million last year, but level with other quarters in the past few years. Chao said her firm has "modest expectations" of such therapies "in light of inconveniences in administration and a challenging referrals environment."

Biogen Idec's revenues of $543 million are a 14 percent increase over this time last year, driven mainly by Avonex and Rituxan sales. Deutsche Bank estimated revenues would be around $578 million.

When making comparisons to last year, Biogen Idec used adjusted pro-forma figures for 2003, reflecting what the operating performance would have been like had the company been one entity beginning on Jan. 1, 2003. In reality, Biogen and Idec completed their $13.7 billion merger last November.

With a prescription drug user-fee act (PDUFA) date of Nov. 25, Antegren could be on the market before year's end. The company anticipates its initial challenges following a launch would be in providing intravenous access to patients and in receiving reimbursement for Antegren.

According to Biogen Idec's collaboration with Dublin, Ireland-based Elan Corp. plc, the companies will receive a 50/50 profit split worldwide for all indications in which Antegren is approved. Chao projects Antegren sales of $240 million in 2005 and $440 million in 2006.

"The companies appear to be in a high state of commercial readiness with an MS sales force enhanced by approximately 200 additional sales specialists already hired," Chao stated in a research note. "Focus on IV access and reimbursement challenges continue and are still expected to be key gating factors for Antegren use."

Biogen Idec intends to provide specific 2005 guidance sometime after the launch of Antegren, but Peter Kellogg, the company's chief financial officer and executive vice president of finance, said the company should have a 15 percent revenue growth and a 20 percent earnings-per-share growth through 2007.

In addition to reporting financial results, the company said its board authorized the repurchase of up to 20 million shares of its common stock. The company recently repurchased just more than 6 million shares, completing the 12 million-share repurchase plan authorized by the board in February.

The company also announced Thursday that it has officially opened the new San Diego Research and Corporate Campus, which consists of 125,000 square feet of biotechnology laboratories. The campus features a community laboratory that will offer students, beginning in late summer 2005, laboratory experiences in biotechnology.

With its year-old merger, Biogen Idec is now the third-largest biotech company and has 4,100 employees, four marketed products and 10 candidates in clinical development in the fields of oncology, neurology, dermatology and rheumatology.

The company has three products in Phase III trials: Rituxan for rheumatoid arthritis and chronic lymphocytic leukemia in collaboration with Genentech and F. Hoffmann-La Roche Ltd.; BG-12 for psoriasis in collaboration with Fumapharm AG, of Lucerne, Switzerland; and Antegren for MS and Crohn's disease in collaboration with Elan.

Biogen Idec and Elan submitted the new drug application for Antegren to treat MS in May and followed the NDA with a European regulatory filing in June.

"Overall, we are very excited about the opportunity that Antegren represents," Rohn said. "With the introduction of Antegren, we believe the potential MS market over the next few years will grow to $6 billion, up from $4 billion today. Antegren should expand the market and become the No. one therapy for MS."

The company's stock (NASDAQ:BIIB) rose $1.03 on Thursday to close at $59.55.