By Mary Welch
Once again, Biogen Inc.¿s multiple sclerosis wonder-drug Avonex helped fuel financial success, as the Cambridge, Mass., company reported an increase of more than 60 percent in net income and earnings per share for the first quarter of 1999, over the same period last year.
Biogen reported fully diluted earnings per share of $0.58 and revenues of $172 million, compared to $0.36 per share and revenues of $114 million for the same quarter in 1998. The company reported net income of $46 million for this quarter as opposed to $28 million in the first quarter of 1998.
Avonex (interferon beta-1a) continues to flourish, with first-quarter sales of $131 million, up from $76 million in the first quarter of 1998, an increase of more than 70 percent. In fact, Avonex represented about three-fourths of the company¿s revenues; for the first quarter of 1998, Avonex¿s sales accounted for almost two-thirds of Biogen¿s revenues. With more than 60,000 patients now using the therapy worldwide, Avonex is the world¿s leader in multiple-sclerosis drugs, in terms of number of patients and sales volume.
¿Biogen is a really simple stock,¿ said Eric Schmidt, vice president at SG Cowen Securities Corp., in Boston. ¿It¿s a one-product company, and its pipeline has yet to mature. As sales of Avonex go up, so will the company, and the trend looks good.¿
Wall Street was not surprised by the news.
¿It was a strong, very strong quarter,¿ said Jay Silverman, senior analyst at BancBoston Robertson Stephens Inc., in New York. ¿We see Avonex driving Biogen¿s sales for the foreseeable future. It¿s a very solid drug, a leader in its category by far. When the [National Multiple Sclerosis Society] put out a release, suggesting an early-treatment program, revenues just grew. It¿s good stuff.¿
Mary Ann Gray, senior vice president of Raymond James & Associates Inc., in New York, said, ¿Avonex is the real story, and it can carry the company over the next couple of years. We expect good solid growth with Avonex, partly by expanding the patient population, early stage and later stage. The word is continuing to spread.¿
Biogen¿s challenge is to bring its drugs, three of which are in Phase II trials, to market, and continue growing the pipeline, analysts agreed.
¿The only question is how much are they increasing their [research and development (R&D)] expenses,¿ said Albert Rauch, senior vice president of Everen Securities Inc., in Chicago. ¿I think Biogen is positioned to spend more on R&D.¿
Biogen said in the most recent report it has increased its research and development budget by 37 percent, to $50 million, up from $37 million in the first quarter of 1998.
¿We will be watching the pipeline,¿ Silverman continued. ¿They¿re expected to release some Phase II results of Amevive, but we don¿t expect that to have a lot of influence on the stock.¿ Amevive (LFA-3/IgG), is a human fusion protein for psoriasis.
Caroline Copithorne, senior biotechnology analyst with Prudential Securities Inc., in New York, found ¿no real surprises¿ in the earnings report.
¿There¿s nothing too earth-shattering,¿ she said. ¿The big thing [will be] when they start reporting progress on their pipeline. Avonex is plugging along fine, but they¿ve got three products in Phase II and, if you just figure the law of averages, at least one of them won¿t work.¿
In addition to Amevive, Biogen has Antova (humanized anti-CD40 ligand antibody/5c8), which is being studied as a treatment for immune thrombocytopenic purpura and lupus and renal transplantation, and Adentri (adenosine A1 antagonist) for edema associated with congestive heart failure, in Phase II trials. Adentri also is in an open-label study for renal transplantation.
The earnings report was released after the U.S. stock market closed Thursday. Biogen¿s shares (NASDAQ:BGEN) ended the day at $120, up $4.00.