By Mary Welch

It was a record year in terms of revenue, net income and diluted earnings per share as Biogen Inc. reported revenues of $557.6 million for 1998 and $168.4 million for the fourth quarter.

Leading the way was Avonex (interferon beta-1a), whose sales continued to grow in the U.S. and Europe. More than 55,000 multiple sclerosis patients are now on Avonex therapy worldwide - an increase of 60 percent over 1997. Total Avonex sales last year increased 65 percent, to $349.9 million. Although year-end European sales figures were not released, fourth quarter 1998 sales were approximately $35 million, more than a three-fold increase over the same 1997 period.

For the three months ending Dec. 31, the Cambridge, Mass., company reported diluted earnings per share of 54 cents and revenues of $168.4 million, compared to diluted earnings per share of 42 cents and revenues of $124 million for the same quarter in 1997. Net income for 1998 was $138.7 million, or $1.80 per share, compared to $89.2 million, or $1.17 per share, in 1997.

As the numbers indicate, Avonex is driving Biogen's success. The company believes the drug will be used by more than 100,000 patients over the next few years. Its market share in the U.S. is 2-to-1 over other multiple sclerosis drugs and it is the leading product in Europe and other markets. One of the company's goals for the year is the continued penetration in Europe as well as gathering data designed to support a broader label, both for multiple sclerosis as well as additional indications.

"It had good quarterly Avonex sales of $124 million, which exceed my estimation of $119 million and was above the Street's $115 million to $117 million," said David Stone, managing director in SG Cowen Securities Corp.'s Boston offices. Based on continued Avonex growth, Stone has increased his estimate of Avonex revenues to $550 million in 1999, $625 million in 2000 and $700 million in 2001.

"Vincent's goal of 100,000 people would equal out to $1 billion in sales," Stone said. "Of course, the company didn't put a time frame on that number. That's a nice goal, but if you annualize the fourth quarter sales, that comes out to $500 million already."

"What really is powering this company now is Avonex," said Rachel Leheny, executive director at Warburg, Dillon, Read LLC in New York. "Its numbers are real good and people are getting excited."

Biogen's pipeline includes Amevive (Human LFA-3/IgG1 fusion protein, LFA3TIP), a T-cell-inhibiting protein being studied for psoriasis, which is in Phase II trials; Antova (Humanized anti-CD40 ligand antibody/5c8), which will enter Phase II trials this quarter for renal transplantation; and Adentri (adenosine A1 antagonist), which is in the preclinical stage for treatment of edema associated with congestive heart failure.

Summary results on Amevive are expected in the second quarter. "There have been promising results in Phase I/II trials but it was with a shorter duration," Stone said. "It remains to be seen if, at a higher dose and longer time, you can keep efficacy without side effects."

Still, Stone isn't overly worried about the pipeline. "Analysts aren't putting too great a focus on the pipeline as long as Avonex is growing smartly. The pipeline is a secondary feature. A more important factor may be if Avonex starts having competition or if sales slow down."

Leheny believes the company's pipeline is too early to assess. "They have stuff that could be great. What they have in Avonex is a bird in the hand," she said. "You have to ask, 'If this were a small company, could you take it public with this pipeline?'"

Biogen's sock (NASDAQ:BGEN) closed Friday at $96, up $5.75. n