By Charles Craig

SAN FRANCISCO — Despite disappointing 1996 market performances for many in the biotechnology industry, two of the sector’s top tier firms, Biogen Inc. and Genzyme Corp., had banner years for revenues.

Jim Vincent, Biogen CEO, said his company anticipates records for 1996 revenues (about $270 million) and net income (more than $40 million) when the year-end fiscal report is complete.

Genzyme President and CEO Henri Termeer, likewise, expects a record performance with fourth quarter revenues totaling $145 million, the 12th consecutive quarterly gain, and revenues for the year reaching $512 million.

Biogen and Genzyme, both of Cambridge, Mass., are among the top six money-making firms in the biotechnology sector. Together with Amgen Inc., of Thousand Oaks, Calif., they also hold the distinction of remaining independent of the takeover-happy pharmaceutical industry.

Genentech Inc., of South San Francisco, is majority-owned by Roche Holding Ltd., of Basel, Switzerland. Chiron Corp., of Emeryville, Calif., is nearly 50 percent owned by Novartis, also of Basel. And Genetics Institute Inc., of Cambridge, Mass., was acquired in December 1996 by American Home Products Corp., of Madison, N.J.

Termeer and Vincent discussed their companies’ 1996 business performances and prospects for 1997 at the Hambrecht & Quist 15th Annual Healthcare Conference in San Francisco. The four-day meeting ends today.

Termeer credited Genzyme’s record year to continued increases in sales of Ceredase and Cerezyme, its drugs for treatment of Gaucher’s disease. The products accounted for more than 50 percent of the company’s 1996 revenues.

The disorder, which affects 40,000 to 60,000 people worldwide, is caused by a deficiency in the enzyme glucocerebrosidase. Patients suffer a variety of complications, such as anemia, bleeding and enlarged liver and spleen.

Genzyme has two forms of its enzyme replacement drug. Ceredase is expensive to produce because it is derived from human placental tissue, a source that has caused controversy. Cerezyme, the recombinant version, is less costly to make and non-controversial.

The annual price tag for either form of the drug per patient is $150,000.

Genzyme’s profit margin and revenues from the drugs are expected to increase again this year as the company replaces Ceredase with Cerezyme, which can now be manufactured on a commercial scale following FDA clearance in 1996 of Genzyme’s new Boston plant.

Termeer said he expects Genzyme’s revenues to grow by 25 percent in 1997 and sales of Ceredase and Cerezyme to exceed $300 million by the end of this year.

Biogen, which has derived most of its revenues from royalties on products partnered with pharmaceutical companies, began directly marketing its first drug in 1996.

Avonex, which is recombinant interferon beta-1a, was approved for multiple sclerosis in May 1996.

Vincent said Avonex became the market leader in multiple sclerosis drugs at the end of 1996. It eclipsed sales of a more established rival treatment, Betaseron, which is made by Chiron and marketed in the U.S. by Berlin-based Schering AG’s American subsidiary, Berlex Laboratories Inc., of Wayne, N.J.

Avonex sales in the U.S. totaled $75 million for the eight months it was on the market in 1996. Biogen’s other revenues from product royalties totaled $150 million for the year.

Vincent said more than 20,000 multiple sclerosis patients are using Avonex. He added about one-third switched from Betaseron, another third started taking Avonex after quitting Betaseron, and the rest are patients just beginning drug treatments.

“We cannot measure the departures from Avonex because the number is so small,“ said Vincent, displaying the aggressive nature of the sales competition.

Avonex and Betaseron, which is interferon-beta 1b, are nearly the same molecule. Avonex’s advantages include administration. It is taken less frequently than Betaseron and delivered more conveniently by intramuscular injection.

Both drugs also will compete in Europe, where the market is considered about the same size as the U.S.

Multiple sclerosis, which affects about 250,000 people in the U.S., is considered an inflammatory disease in which the body’s own immune system destroys the myelin sheath protecting the central nervous system’s nerve fibers. As a result, signals from the brain to the body are disrupted, complicating a variety of activities, such as movement, speech, vision and short-term memory.

In December 1996, Jerusalem-based Teva Pharma- ceutical Industries Ltd. became the third entrant in the U.S. multiple sclerosis market when the FDA approved Copaxone, a synthetic polypeptide made of four amino acids.

Mechanisms of action of all three multiple sclerosis drugs are not known. An advantage of Copaxone over the beta interferon products is its lack of flu-like side effects.

Vincent said Biogen expects a strong sales effort from Teva’s U.S. marketing group, Teva Marion Partners, of Kansas City, Mo. But he warned that Teva can expect an aggressive sales campaign from Biogen.

Teva Marion Partners is a joint venture between Teva and Frankfurt, Germany-based Hoechst Marion Roussel, whose U.S. offices are in Kansas City.

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