Staff Writer

Biogen Idec Inc. beat analyst expectations for earnings in the first quarter of 2009, but product revenues fell short across the board, and Tysabri once again showed slower-than-anticipated growth.

For the first quarter, Biogen Idec posted net earnings of $306 million, or $1.05 per share, beating analyst estimates of $295.3 million, or $1 per share. The performance was largely driven by a one-time tax rate benefit, as well as by the biotech's efforts to "aggressively" control expenses in the face of a "more challenging macro environment," CEO James Mullen told investors during a conference call.

Biogen Idec's first-quarter research and development expenses were $279 million, lower than the $285 million expected by analysts. But while the company pulled off a bottom-line win, Robert W. Baird & Co. analyst Christopher Raymond wrote in a research report that he was "not impressed with top-line performance or outlook."

Biogen Idec's first-quarter revenues of $1.036 billion fell short of analyst estimates of $1.079 billion. Although all of the company's products posted gains compared to the first quarter last year, none managed to hit the analysts' targets.

Multiple sclerosis stronghold Avonex (interferon beta-1a) generated $555 million, while analysts had anticipated $573 million. Raymond raised concerns that the price hikes driving the product's growth "can't last forever," and the market-leading product is expected to face increasing competition with patent expirations starting in 2011.

Biogen Idec's second-biggest money maker, Rituxan (rituximab), brought in $279 million in the first quarter, while analysts had expected $287 million. Yet the drug, which Cambridge, Mass.-based Biogen Idec co-promotes with South San Francisco-based Genentech Inc. (now part of F. Hoffmann-La Roche Ltd.), has plenty of room for future growth. An FDA action on a bid to expand Rituxan's label in rheumatoid arthritis is expected this year, as is a filing for approval in chronic lymphocytic leukemia.

But it was multiple sclerosis drug Tysabri (natalizumab) that garnered the most scrutiny from analysts. Global first quarter sales of $227 million missed the $246 million analyst target, causing Biogen Idec's $165 million share of the revenues on the drug - which it co-promotes with Elan Corp. plc - also to miss the $180 million analyst target.

Tysabri (natalizumab), which was pulled from the market in 2005 due to its association with the often-fatal brain infection progressive multifocal leukoencephalopathy (PML), has battled to regain market share since its rare second FDA approval in 2006. (See BioWorld Today, March 1, 2005, and June 6, 2006.)

Biogen Idec originally had hoped to have 100,000 patients on the therapy by the end of 2010, but with 37,600 patients at the end of last year and 40,000 as of the end of March, that goal may be difficult to achieve.

That said, Mullen pointed to "early signs of success in turning Tysabri around" - particularly the fact that new patient numbers were up in February and March. Yet Raymond argued that the first-quarter weekly average as a whole was down from the fourth quarter, which was down from the third quarter.

Jonathan Aschoff, analyst with Brean Murray Carret & Co., also noted in a research report that he believes doctors "will increasingly use drug holidays in order to reduce the risk of PML, which should continue to offset revenue growth from new patient adds."

Biogen Idec's multiple sclerosis franchise may face competition in the near future. Acorda Therapeutics Inc. is working to file a new drug application for its multiple sclerosis product Fampridine-SR, while Phase III programs are under way with MS drugs alemtuzumab (Genzyme Corp. and Bayer AG), fingolimod (Novartis AG), dirucotide (BioMS Medical Corp.) and laquinimod (Active Biotech and Teva Pharmaceutical Industries Ltd.).

Biogen Idec has its own next-generation MS drugs in the pipeline, including brand-extension plays for Rituxan and a pegylated version of Avonex as well as new drugs such as the Phase III small-molecule BG-12 (dimethyl fumarate) and the Phase II antibody daclizumab.

Mullen said on the conference call that Biogen Idec has 20 programs in Phase II trials or later and aims to have nine pivotal programs under way by the end of the year. Late-stage plays outside of MS include the antibody galiximab for non-Hodgkin's lymphoma, the antibody ocrelizumab for rheumatoid arthritis and two partnered cardiovascular programs.

Analyst Caroline Stewart, of Piper Jaffray & Co., wrote that she is "unenthused" about Biogen Idec's late-stage candidates but "cautiously optimistic" on some earlier-stage compounds.

Biogen Idec reported $2.5 billion in cash, equivalents and marketable securities at the end of the first quarter and reaffirmed its full-year guidance. The company's shares (NASDAQ:BIIB) fell $1.40, to close at $50.09 Friday.

Raymond noted that he believes "Icahn-driven takeout speculation has added a measurable degree of premium" to the stock lately.

Billionaire investor Carl Icahn recently nominated four people to Biogen Idec's board. He reportedly tried to push the company's sale in 2007, but Biogen Idec opted to remain independent after failing to attract any bids. (See BioWorld Today, Dec. 14, 2007.)