Biogen Inc. turned in first-quarter financial results better than consensus estimates.
The Cambridge, Mass.-based company's earnings per share hit 50 cents, excluding one-time charges, 2 cents higher than expected. Biogen's revenue totaled $321 million, an 11 percent increase from a year ago.
Annualizing such numbers to provide guidance for the full year, Biogen reiterated prior earnings-per-share projections of $1.72 to $1.85. For the second quarter, Biogen projected diluted earnings per share between 38 cents and 44 cents.
Given one-time charges totaling $16 million for legal and other write-down expenses, Biogen's quarterly net income dipped to 42 cents per share, down from 47 cents per share a year ago. Such numbers are in line with projections Biogen announced April 2, with earnings per share then forecasted to range between 39 cents and 43 cents.
Nevertheless, the company said it sees reasons for future growth.
"This year represents a year of top- and bottom-line growth acceleration for Biogen," CEO James Mullen said during a conference call. "We will begin to reap the benefits of having multiple products on the market . . . and as we look forward, the drivers of business are pretty simple: Avonex so far is stronger than expected, and we continue to believe that is going to hold up; for Amevive, the leading indicators show that its launch is right on track and performing well; and for Antegren, we will have the results on Crohn's this year and results on MS shortly after that."
Avonex, Biogen's marketed multiple sclerosis treatment, produced overall sales of $274 million, up 3 percent from the year-earlier first quarter. The company classified U.S. sales, which totaled $189 million, as steady, while pointing to international sales growth totaling $85 million.
"The Avonex numbers were definitely respectable, though a lot of the growth overseas was from currency gain," Stefan Loren, an analyst with Legg Mason, told BioWorld Today. In the past year, Avonex has begun to feel pressure from a competitive product, Rebif, developed by Geneva-based Serono SA and marketed in the U.S. by New York-based Pfizer Inc.
But Biogen, which touted the product's low side-effect profile as favorable for chronic use, believes it has fended off sales of Rebif. Eric Schmidt, an analyst with SG Cowen Securities Corp., wrote in a research note that though much of Biogen's projected revenue growth from Avonex comes from mid-double-digit expectations overseas, its U.S. sales prospects remain solid as well.
"Biogen continues to expect U.S. Avonex sales growth of 0 percent to 2 percent," he wrote. "While certainly not spectacular, this growth does suggest that Avonex is holding its own against Rebif in the U.S. market, and should give investors confidence that the Avonex franchise will continue to be a cash cow for Biogen for the foreseeable future."
The company also reaped $41 million in royalties, an 85 percent increase over the corresponding year-earlier period.
But as New York-based SG Cowen noted, all eyes are on Amevive (alefacept). Sales of the injectable psoriasis treatment, approved in late January, reached $4 million. Biogen expects numbers to continue to climb as the product gains in profile among doctors and patients, and reimbursement improves. Biogen said such issues would improve, noting that already 90 percent of patients are receiving some form of insurance coverage.
The company projects $85 million in total-year sales, numbers SG Cowen endorsed in its research note. Biogen conservatively estimated the addition of 13,000 to 17,000 patients per year for Amevive treatment. Some analysts have forecast annual sales in excess of $500 million eventually.
Still, Loren said he fears the drug could lose ground to anti-TNF drugs being used off label such as Enbrel, from Thousand Oaks, Calif.-based Amgen Inc.
"While we did expect a slow Amevive launch, we're still putting out trust in the fact that this is going to ramp very quickly," Loren said. "But the more time it takes to get this initial ramp-up, the more chance the competitors, especially the anti-TNFs, have to establish a stronger foothold in the off-label use of those drugs and the closer we get to their on-label use."
The product, designed to selectively target the CD45RO+ subset of T cells, suffered a marked setback when it was not approved for sales and marketing in the European Union. Biogen said it would have to submit extra data and might have to conduct an additional trial before Amevive's situation overseas is resolved. (See BioWorld Today, Feb. 21, 2003.)
But investors reacted positively overall to Biogen's message. Its stock (NASDAQ:BGEN) climbed $2.01 Thursday to close at $35.84.
Biogen's positive promotion of Antegren (natalizumab) brightened the company's overall news as well. Two Phase III trials continue in studying the drug as a treatment for multiple sclerosis, while another Phase III trial is studying it in Crohn's disease patients.
Biogen said it could file for FDA approval for the latter indication by the end of this year, with filing for the MS indication to follow soon after. Loren called such projections earlier than expected, resulting in better potential upside for the company as a whole.
Over the course of the year, Biogen said it expects mid-teen revenue growth. Mullen added that the company would beat the analyst consensus for earnings growth of 13 percent through 2005 - he forecasted growth closer to 20 percent.
"Obviously there are some positives in here, and in our opinion some negatives as well," Loren said. "I think the company continues to put out some pretty aggressive targets, and on one hand that's what one needs to do if one wants the stock to go up, but at the same time it may be difficult to reach all these targets."
Neither Legg Mason nor Loren owns Biogen stock or has an investment banking relationship with Biogen, though SG Cowen said it makes a market in Biogen's securities.
Biogen ended the quarter with $812 million in cash and marketable securities.