Biogen Inc., which derives its revenues from royaltypayments, beat analysts' third-quarter estimates when itreported net income of $1.1 million, or 3 cents per share.

Most analysts projected that Biogen would report a lossfor the quarter, with the average estimate calling for aloss of 2 cents. Revenues for the quarter were $38 millioncompared to $31.8 million a year ago. Biogen last yearhad a net loss of $26.4 million, which included a $25million charge related to the discontinuance of Hirulogdevelopment.

The Cambridge, Mass., company's revenues are derivedfrom royalties on sales of is alpha interferon product,Intron A, by Schering-Plough Corp., and its hepatitis Bvaccine sold by two partners. But analysts said the picturewill change when Biogen starts to market Avonexinterferon beta-1a, which will be the company's firstproduct it intends to market itself. Approval is expectedby mid-1996, analysts said.

"Biogen had a very nice earnings report," said MatthewGeller, an analyst with Oppenheimer & Co. "Theirroyalty stream, which looked like it would be underpressure, is starting to go up. That they made moneywhile ramping up could mean a very fast ramp-up inearnings" when Avonex gets to market.

"The royalties are going to pay for all the research,"Geller said. "Avonex goes right to the bottom line."

Avonex is the first multiple sclerosis drug to demonstratein clinical trials that it can slow progression of thedisease. An FDA advisory committee is scheduled toreview Avonex at a meeting on Dec. 4, 1995.

Ed Hurwitz, an analyst with Roberston, Stephens & Co.,said investors buying into Biogen should focus on the1997-98 time frame.

"There may be a little upside beyond my projections, butmost of the near-term move in Biogen is behind us,"Hurwitz said. "Schering-Plough's marginally betterquarter for alpha interferon sales brought the numbers up.The [third-quarter] numbers were better than people hadthought, but that's not the reason to own the stock. Iexpect a positive recommendation [for Avonex] andapproval in the first half of 1996."

Hurwitz said he expects earnings of $2.70 per share in1997, and the stock to be priced at $65 per share in 1996.

Biogen released its earnings after the market closedThursday. Its stock (NASDAQ:BGEN) fell 75 centsFriday to close at $61.25 per share.

The company spent $22.5 million on research in thequarter. It had cash and marketable securities of $285million, and 36.7 million shares outstanding. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.