Biogen Inc., anticipating FDA approval of Avonex during the secondquarter of 1996, pointed to expenses related to preparations forcommercial launch of the multiple sclerosis drug as the main reasonfor a sharp decline in earnings for the first three months of the year.
Most Wall Street analysts expected the Cambridge, Mass., company,to lose money the first quarter of 1996 as it assembled a sales forceand expended other funds associated with gearing up for marketingits first major drug. But the net loss of $3.7 million, or 10 cents pershare, was more than the analysts' consensus projection of 8 cents.
In the first quarter of 1995, Biogen recorded a net gain of $2.8million, or 8 cents per share, and it ended the year with a profit of$5.7 million, or 16 cents per share.
Revenues, primarily from royalties on alpha interferon and hepatitisB vaccines, increased to $38.8 million for the first three months ofthis year from $36 million a year ago. However, revenues declinedfrom the $40.6 million in the fourth quarter of 1995.
David Stone, analyst for Cowen & Co., in Boston, attributed theslight drop in revenues from the fourth quarter of 1995 to fluctuatingsales of hepatitis B vaccines, which are marketed by London-basedSmithKline Beecham plc and Merck & Co., of Whitehouse Station,N.J.
The slight jump in revenues during the first three months of this yearcompared with the same period last year was based on increased salesof alpha interferon, which is marketed by Schering-Plough Corp., ofMadison, N.J., as Intron A for cancer and viral diseases.
Biogen's total revenues for 1995 were $151.7 million.
The company released its first quarter financial results after themarket closed Monday. Its stock (NASDAQ:BGEN) ended Tuesdayat $61, down 25 cents.
Stone said the modest first quarter loss is not an issue whenconsidering Biogen's royalty revenues have supported preparationsfor the launch of Avonex and the company has $293 million in cash.The real questions, he said, are how soon Avonex will get approvedand how well the drug will be received by multiple sclerosis patients.
An FDA advisory panel recommended Avonex, interferon-beta 1a,for approval in December 1995.
In a prepared statement included with the fiscal report Monday,Biogen Chairman and CEO Jim Vincent said the company was "nowworking closely with the FDA on final labeling details" and"anticipated approval this quarter of Avonex."
Once cleared for marketing, Avonex will compete with Betaseron, abeta interferon drug manufactured by Chiron Corp., of Emeryville,Calif. Betaseron is marketed by Berlex Laboratories Inc., of Wayne,N.J., and its parent company, Schering AG, of Berlin.
If Avonex is approved this quarter, Stone projected $75 million inU.S. sales for the second half of 1996. In 1997 he estimated Avonexsales will reach $325 million, which are about equal to U.S. revenuesfor Betaseron.
"The expectation is Avonex and Betaseron will get a 50-50 marketshare in the U.S.," Stone said.
In addition to expenses for the anticipated market launch of Avonex,Biogen boosted spending for research and development in the firstquarter of 1996 to $24.4 million from $20.4 million during the sameperiod last year.
The company said it began Phase I safety evaluations with a T cellinhibitor, called LFA3TIP, for autoimmune diseases. n
-- Charles Craig
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