Biogen Reports 65 Percent Jump In First Quarter Profit

By Mary Welch

Biogen Inc.'s multiple sclerosis drug, Avonex, continues to fuel its financial health as the Cambridge, Mass,. company reported a net income of $28 million, or $0.36 per share, for the first quarter of this year, a 65 percent increase over the $17 million, or $0.22 per share, for the same period in 1997.

Revenues for the quarter, ending March 31, 1998, reached $121.4 million, up from $99.7 million last year.

Biogen's revenues were in line with Wall Street's expectations and slightly higher than some analyst predictions. Peter Drake, of Vector Securities International Inc., of Deerfield, Ill., said, "I had assumed a higher R&D expense."

"We're very pleased with Avonex's sales and expect to see more growth in the U.S. and European markets," said Elizabeth Woo, Biogen's manager of investor relations. "Avonex is growing as expected and that is reflected in the earnings."

Biogen's stock (NASDAQ:BGEN) closed Thursday at $44.375, down $1.75.

Avonex sales of $76.1 million are responsible for almost two-thirds of Biogen's first quarter revenues. Sales from Avonex are up 45 percent compared with the same period last year.

Avonex has two competitors. Teva Pharmaceutical Industries Ltd., of Jerusalem, introduced Copaxone in early 1997. Berlex Laboratories Inc., a Wayne, N.J.-based subsidiary of Schering AG, of Berlin, sells Betaseron. Manufactured by Emeryville, Calif.-based Chiron Corp., Betaseron has been on the market since 1994.

Avonex has captured 67 percent of the market up 8 percent from last year. The company said 38,000 muliple sclerosis patients are taking the once-a-week drug a net gain of at least 1,000 over 1997.

"Avonex is the most patient friendly MS treatment, and the Biogen marketing initiatives continue to position the product as the number one choice among both patients and physicians," Drake said in a report on Biogen's quarterly earnings disclosures.

David Stone, an analyst with Cowen & Co., in Boston, said in his report that sales of Avonex might double over the next two years from $240 million in 1997 to $500 million in 1999, with 1998 sales projected at $360 million.

Biogen recently signed agreements to distribute Avonex in Central and Eastern Europe, South Africa, Turkey and the Middle East. Avonex recently was introduced in France, and Monday the drug was approved in Canada with introduction slated within weeks. Several more approvals are expected by the end of the year.

Biogen also is starting a large-scale clinical trial with Avonex in secondary progressive multiple sclerosis. And it is considering Avonex for non-multiple sclerosis indications, such as glioma, a fatal form of brain cancer. Clinical studies for glioma are under way, and Biogen plans to expand enrollment for the next several quarters.

Biogen is collaborating with Merck & Co., of Whitehouse Station, N.J., on anti-inflammatory drugs. A Phase I exploratory trial in Europe for asthma is being conducted with a lead anti-VLA4 inhibitor. The drug binds to a receptor molecule known as VLA4, which is found on most types of white blood cells but not on neutrophils.

"We believe Biogen remains well positioned to achieve near term and sustained earnings growth," Drake wrote.

"Biogen has four products in Phase II and an active licensing effort and $450 million in cash on the balance sheet," he said. "There's a lot those guys can do." *