By Mary Welch

Once again the story is Avonex, the blockbuster multiple sclerosis (MS) drug, driving Biogen Inc.'s third-quarter income.

The company, based in Cambridge, Mass., reported net income of $62 million, or 39 cents per share, in the quarter ended Sept. 30, a substantial increase of 65 percent over the same time period last year. For third quarter 1998, the company posted a net income of $37.6 million, or 24 cents per share. Revenues for this quarter were $208.4 million vs. $146 million, an increase of 43 percent over the year-earlier figure. The company has cash on hand of $672 million.

"It was a good quarter and Avonex is growing quite well - and there's still room to grow," said Albert Rauch, senior vice president and biotech analyst with First Union Securities Inc., in Chicago. "We expect Avonex to hit $1 billion in sales by 2002, which is about the time Biogen will launch Amevive. I'm gaining more confidence in their pipeline. There's a lot of upside risk and very little downside risk."

Revenues for the first nine months of 1999 were $569 million, compared to $389 million for the nine months of 1998. Net income for the nine-month period was $151 million for 1999, $96.7 million for 1998.

Avonex's revenue growth was largely propelled by patient growth, Biogen said. Avonex (interferon beta-1a) is the world's leading multiple sclerosis drug, both in terms of number of patients and sales volume. Its market share is more than two to one over the other multiple sclerosis drugs on the market in the U.S.

The number of new Avonex patients increased by more than 7,000 in the third quarter. More than 77,000 patients are now taking the drug. It is the first-line drug of choice in the treatment of relapsing-remitting MS and has 60 percent of the U.S. market share and 40 percent share in Europe.

Avonex's sales jumped 52 percent year over year and had third quarter sales of $163.4 million, compared to $107.5 million in the same quarter of 1998.

"I'm very bullish on Biogen," said David Saks, managing director of Gruntal & Co. LLC, of New York. "We believe Avonex will have total sales this year of $630 million, or $20 million above our prior projection. We think 100,000 people will be using it in 2000, and it's still far below the target 500,000 population. Biogen is delivering superior sales and earning momentum well above most drug firms."

Matthew Geller, senior biotech analyst with CIBC World Markets Corp., of New York, said that Biogen's challenge is to "proceed to another level. This is a key transitional year. They've got to grow Avonex, yet diversify themselves through their pipeline. They've got to prove their pipeline."

The company's pipeline has three lead drugs in trials, including Antova, which is now in clinical trials in six indications, including multiple sclerosis, and Amevive. Biogen has started Phase III registrational studies in North America and Europe with Amevive, with the trial slated to start this year. Amevive (LFA-3/IgG) is a human fusion protein for psoriasis.

"I'm hearing good things about Amevive," said Rauch.

Antova (humanized anti-CD40 ligand antibody/5c8) is being studied as a treatment for immune thrombocytopenic purpura (ITP), lupus and renal transplantation. Phase II date on the ITP indication should be presented at the American Society of Hematology annual meeting in New Orleans in early December.

Another drug, Adentri (adenosine A1 antagonist), is in Phase II trials for edema associated with congestive heart failure and in an open-label study for renal transplantation. The Phase II results are expected in the first half of 2000.

Biogen's stock (NASDAQ:BGEN) closed Friday at $84.9375, down $3.75.