Biogen Inc. disclosed its earnings report showing another strong quarter, led once again by the top-selling multiple sclerosis drug Avonex, which chalked up worldwide sales of $298 million.
"Quite simply, this was a quarter where, once again, Avonex drove the whole story," Peter Kellogg, chief financial officer of Cambridge, Mass.-based Biogen, said during a conference call.
For the three months ended Sept. 30, Biogen's revenues totaled $342 million, an increase of 19 percent over the third quarter of 2002, with Avonex selling 14 percent more than in the same quarter of 2002 and U.S. sales comprising $204 million of the total amount. Royalty intake added $29 million, 7 percent more than the same period last year.
Amevive (alefacept), Biogen's psoriasis treatment approved in late January, sold $12 million - not what some analysts expected, and the news came on the heels of FDA approval of South San Francisco-based Genentech Inc.'s psoriasis drug, Raptiva (efalizumab).
Biogen's net income increased 31 percent to $55 million, or 36 cents per share, in the third quarter, from $42 million, or 28 cents per share, in 2002. Operating earnings per share was 51 cents in the third quarter of 2003 vs. 37 cents in the same period of 2002, a rise of 39 percent.
Results in 2003's third quarter exclude an up-front payment related to licensing a second-generation fumarate derivative from Fumapharm AG, of Lucerne, Switzerland; costs related to the planned merger with San Diego-based IDEC Pharmaceuticals Inc. (expected to complete in mid-November); gains on the sales of securities; and an equity write-down. (See BioWorld Today, Oct. 2, 2003, and June 24, 2003.)
On an after-tax basis, those charges were $22 million, or 14 cents per share.
Biogen's late-stage pipeline is moving steadily. It has Antegren (natalizumab) in Phase III trials for MS and Crohn's disease. Rituxan (rituximab), already approved for non-Hodgkin's lymphoma, is in Phase III trials for rheumatoid arthritis. And partner Fumapharm has started a Phase III trial in Europe with the aforementioned drug against psoriasis.
In June, Biogen and IDEC said they would merge as equals to form a company called Biogen IDEC, which would have almost $2 billion in revenues from four products, including Zevalin (ibritumomab tiuxetan), IDEC's drug for NHL.
The new company has said it will save more than $300 million in operating expenses and $175 million in capital expenditures over the next four years, enabling an expected 15 percent growth in annual revenue and 20 percent growth in earnings per share through 2007, noted Eric Schmidt, analyst with SG Cowen Securities in New York. Schmidt called Avonex (interferon beta-1a) a "cash cow."
If there's a problem, it's with Amevive, sales of which fell short of some Wall Street estimates, including Schmidt's. Waiting for reimbursement is one factor slowing the use, though the company said that waiting period seems to be going down.
"This is one of the key metrics we've been tracking," said James Mullen, Biogen's chairman and CEO, during the conference call, adding that "overall, the reimbursement environment continues to improve."
Also, the co-pay for many patients with medical benefits can be high - sometimes as much as 20 percent of the cost, which is $2,400 per year. That is improving but "there's still a significant group that has issues," Mullen said.
Meanwhile, Genentech disclosed Monday that the FDA approved Raptiva, its psoriasis drug - an event Winton Gibbons, analyst with William Blair & Co. in Chicago, said will have little effect on Amevive.
"Let's be clear about this," he told BioWorld Today. "Amevive is not really being accepted. What's [Raptiva's approval] going to interfere with?"
Although Gibbons lowered his 2004 revenue estimate for Amevive to $81 million from $137 million, he predicted the Raptiva approval will "stimulate the primary, underlying demand in the market for biologics approaches to psoriasis."
Raptiva is expected to be launched by late November. "It's possible that in the first quarter there will be more of a conflict between the two," but this will level out, Gibbons said.
"You're just going to have a lot more medical education among dermatologists, spread between the two companies," he said, so that Biogen hardly will be hurt by Raptiva over the long run.
"I'm saying it's going to help them more than hurt them," Gibbons said.
Meanwhile, Gibbons said, a "turnaround is on its way" with regard to Avonex. Strong as the drug has proven, sales in the U.S. declined from May 2002 to May 2003 on a rolling, three-month basis, he said.
"Six weeks ago, you could probably have said it flattened," he added, but for the past month and a half, sales have been on the rise "for the first time in a year."
In August, the new prefilled syringe for Avonex became available in the U.S., a factor that boosted sales even more, analysts noted. The syringe is being made available on a country-by-country basis in Europe.
Biogen's stock (NASDAQ:BGEN) closed Tuesday at $39.30, up $2.09.