Biogen Inc.'s second quarter 1995 earnings were nearlythe same as a year ago, but the Cambridge, Mass.-basedcompany's income for the first six months of this yeardropped 70 percent compared with the same period in1994.

Earnings per share for the quarter ending June 30 were 2cents, which equaled the performance for the same threemonths a year ago. Net income was $714,000 on revenuesof $36.9 million for the second quarter compared withincome of $611,000 on sales of $36.8 million in 1994.

Although earnings were slightly lower than most WallStreet estimates, Biogen's overall performance was notunexpected as it continues to incur expenses associatedwith the anticipated market launch next year of its betainterferon product, Avonex, for multiple sclerosis.

In addition to releasing its quarterly fiscal report lastweek, Biogen said it filed for approval of Avonex inCanada, completing worldwide regulatory filings for thedrug. An FDA advisory committee is expected to reviewAvonex this year.

Biogen reported net income of $3.5 million, or 10 centsper share, for the first half of 1995, compared with $11.8million, or 34 cents per share, in 1994, a 70 percentdecline.

Revenues for the first six months also were down to$72.9 million for the first six months of this yearcompared with $81.5 million last year.

Biogen officials said the difference in total revenues forthe first half of 1995 and last year is tied to a one-time,$10 million payment in the first quarter of 1994 from EliLilly and Co., of Indianapolis, for rights to a geneexpression technology.

Most of Biogen's revenues are generated from royaltieson sales of its alpha interferon drug and hepatitis Bvaccine. The latter is marketed by London-basedSmithKline Beecham plc as Energix-B and by Merck &Co., of Whitehouse Station, N.J. as Recombivax. Thealpha interferon product is sold by Schering-PloughCorp., of Madison, N.J., as Intron A.

Biogen officials said the lower total revenue andincreased expenses associated with developing a salesand marketing infrastructure for Avonex account formuch of the steep drop in net income for the first half ofthe year.

"The real issue with Biogen is what is the market forAvonex," said Matthew Geller, an analyst withOppenheimer & Co. in New York. "Biogen's actionsindicate they are confident the drug will be approved.They're building a $50 million manufacturing facility [inNorth Carolina] and clearly they see a substantial marketfor the product."

Avonex is the first multiple sclerosis drug to demonstratein clinical trials that it can slow progression of theneurological disease. About 300,000 people in the U.S.suffer from multiple sclerosis. The only drug currently onthe U.S. market for the disease is Betaseron, which wasdeveloped by Chiron Corp., of Emeryville, Calif., and itsmarketing partner, Germany-based Schering AG.

Although near-term interest in Biogen focuses on thelaunch of Avonex, the company also said it is trying tobolster its long-term growth potential by acquiring aposition in the gene therapy field. Talks have beenongoing since January with an as yet unidentified genetherapy company.

Biogen's stock (NASDAQ:BGEN) closed Friday at$45.50, down $1.13. n

-- Charles Craig

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