Despite a rocky year that began with the Tysabri market withdrawal, Biogen Idec Inc. reported strong fourth-quarter and full-year 2005 earnings driven by robust Avonex sales and lower expenses.

The Cambridge, Mass.-based company posted non-GAAP earnings per share for the quarter of 48 cents - a penny above consensus - as well as a net income of $165 million. For the full year, non-GAAP EPS were $1.57 and net income reached $542 million.

Analysts agreed that for a company plagued in 2005 by safety issues concerning the multiple sclerosis drug Tysabri, once thought to have blockbuster potential, Biogen Idec has fared OK. Shortly before the after-market earnings release Wednesday, the company announced that the FDA removed a clinical hold on Tysabri, paving the way for Biogen Idec and its partner Elan Corp. plc, of Dublin, Ireland, to begin an open-label monotherapy safety study, with patients from the Phase III AFFIRM and SENTINEL trials. Tysabri was pulled from the market last year, and has been linked to three confirmed cases of progressive multifocal leukoencephalopathy. (See BioWorld Today, March 1, 2005.)

Some analysts viewed the removal of the clinical hold as a good sign that the product would be re-introduced this year. The FDA move comes ahead of an advisory panel that will meet to discuss a supplemental biologics license application on March 7 and 8. An FDA decision is expected later in the month.

The panel meeting was extended to two days because of the large number of parties interested in making public comments about the therapy. Nevertheless, analysts’ U.S. sales estimates top out with New York-based SG Cowen & Co. Inc.’s peak U.S. opportunity of $400 million to $600 million, and they fall as low as Chicago-based Robert Baird & Co.’s outlook of $23 million, $118 million and $172 million in 2006 through 2008, respectively.

Analysts believe any upside from Tysabri already is built into Biogen Idec’s stock, and the therapy may be limited to beta-interferon failures or considered a "treatment of last resort," wrote Baird analyst Christopher Raymond in a research note.

Some analysts do not even include the drug’s sales in their current models. Jason Kantor, of San Francisco-based RBC Capital Markets, for instance, does not include Tysabri sales because his firm views the sBLA filing as "high risk," and considers non-approval "as a significant possibility."

While the what-ifs of Tysabri overshadow Biogen Idec’s earnings this week, analysts noted that fourth-quarter ex-U.S. sales of the MS drug Avonex - $171 million - beat their estimates significantly. David Molowa, an analyst with New York-based UBS Securities LLC, wrote that the 22 percent year-over-year growth outside the U.S. was "impressive and resulted from strong volume growth and some pricing benefit." Biogen Idec increased Avonex pricing by 9 percent in December, but the robust ex-U.S. sales were offset somewhat by a negative foreign currency effect.

U.S. sales of Avonex, however, were in-line with analyst estimates and reached $242 million for the quarter. Full-year Avonex sales worldwide climbed to $1.5 billion.

Analysts were less enthused over Biogen Idec’s other products and revenue sources. Baird’s Raymond said Zevalin’s fourth-quarter sales of $4 million were only half of his firm’s estimate, and Amevive fell short by $2 million, posting only $12 million for the quarter. Fourth-quarter royalty revenue of $22 million also came in lower than Baird’s estimate of $31 million. Full-year figures for the cancer drug Zevalin, the psoriasis drug Amevive and the royalties were $20.8 million, $48.5 million and $93 million, respectively.

The Street also is keeping a close eye on Biogen Idec’s progress with Rituxan, which received FDA approval earlier this month for a label expansion as a front-line combination agent in diffuse large B-cell, CD20-positive, non-Hodgkin’s lymphoma.

The company receives Rituxan revenues through a co-promotion arrangement with South San Francisco-based Genentech Inc., and the lymphoma drug was a major driver in Biogen Idec’s 10 percent revenue increase for 2005. It brought in $709 million for the year, or $182 million for the quarter.

Total revenues in 2005 exceeded $2.4 billion, compared to $2.2 billion in 2004, and fourth-quarter revenues climbed 8 percent from the prior year to $633 million.

Biogen Idec is expected to file another sBLA for Rituxan to treat indolent, front-line and maintenance non-Hodgkin’s lymphoma in the first half of this year, and the FDA’s PDUFA date for the use of Rituxan in rheumatoid arthritis patients who failed anti-TNF therapy is scheduled for Feb. 28.

Also in the pipeline, Biogen Idec has oral fumarate BG-12 in Phase II development for multiple sclerosis; daclizumab, for the same indication, which is entering a Phase II monotherapy trial this summer; and M200 (volociximab), which should have Phase II solid-tumor data available in June at the American Society of Clinical Oncology meeting.

While analysts called Biogen Idec’s pipeline "modest" and with "little new" to offer, they did note that the company’s expenses fell lower than expected. Fourth-quarter research and development expenses were $168 million; selling, general and administrative expenses were $169 million; and cost of product and royalty revenues were $113 million. For the year, the figures were $748 million, $645 million and $374 million, respectively.

The company has been running a tight ship after announcing plans last September to reduce its work force by 17 percent and divest certain assets, including Amevive, to free up funds for its pipeline. The move is expected to cut expenses by as much as $300 million annually. That "significant restructuring initiative," said SG Cowen’s Eric Schmidt and colleagues, "suggests that Biogen management is willing to make tough decisions in order to build shareholder value." (See BioWorld Today, Sept. 12, 2005.)

Biogen Idec expects its 2006 non-GAAP earnings per share estimates, excluding the impact of stock option expensing, will be in the range of $1.95 to $2.10, and capital expenditures to be between $190 million and $275 million.

The company’s stock (NASDAQ:BIIB) rose $1.61 Thursday to close at $47.33.

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