UPDATE: Biogen 4Q Net Up 2.7%; Icahn Renews Proxy Fight
February 06 2009 - 12:12PM
Dow Jones News
Biogen Idec Inc. (BIIB) said fourth-quarter profit inched up
2.7% on higher sales of its multiple-sclerosis drugs, but signaled
that continued sales growth for its newer drug Tysabri could face
challenges.
Biogen shares declined $1.27, or 2.4%, to $52.01 Friday
morning.
Biogen disclosed Friday the fifth case of a rare but potentially
lethal brain infection in a Tysabri user since the drug's 2006
relaunch. Tysabri had been pulled from the market in 2005 following
reports of the infection, progressive multifocal
leukoencephalopathy, or PML. Biogen executives said the rate of
infection was still relatively low.
Meanwhile, activist investor Carl Icahn nominated four people to
Biogen's board, rekindling a battle for control of the
biotechnology company that lasted through mid-2008. The billionaire
has increased his minority Biogen ownership stake, but has stayed
quiet since losing a proxy fight in June after Biogen failed to
sell itself in 2007. Icahn had argued that Biogen was undervalued
and would do better as part of a large pharmaceutical company.
Biogen Chief Executive James Mullen said Friday that the board
hadn't had a chance to review Icahn's proposal, which also included
a request that the company's jurisdiction of incorporation be
changed to North Dakota, and that the board's size be changed to
13.
The Cambridge, Mass., company also provided a full-year earnings
outlook that topped Wall Street's estimates by a penny.
Many smaller biotechnology companies are in a precarious
position as the credit crisis makes it harder to raise cash needed
for drug development. Some are looking to sell themselves or their
products to a larger company - just as larger drug makers look for
lucrative new drugs for their depleted pipelines.
Mullen noted Friday, however, that Biogen's pipeline has been
"transformed" in the last two years, and now includes 22 drugs in
Phase 2 trials and beyond for 2009.
The biotechnology company reported net income of $206.7 million,
or 70 cents a share, up from $201.2 million, or 67 cents a share, a
year earlier. Excluding acquisition-related and stock-compensation
costs, earnings rose to 93 cents a share from 89 cents.
Revenue rose 20% to $1.07 billion.
Analysts surveyed by Thomson Reuters had expected earnings,
excluding items, of 93 cents a share on revenue of $1.09
billion.
Gross margin edged up to 90.5% from 90.2%.
Sales of Biogen's bestseller, MS drug Avonex, rose 13%. The
company's share of revenue from Tysabri sales soared 74%. The
balance goes to Biogen's partner on the drug, Ireland's Elan Corp.
(ELN), which in mid-January said it was reviewing its strategic
options, which could include a sale of the company.
Biogen said global "in-market" sales of Tysabri were $218
million for the fourth quarter, with $115 million from the U.S. and
$103 million outside the U.S.
Citigroup analyst Yaron Werber said Tysabri sales came in below
expectations. Biogen executives noted Friday that Tysabri growth
was hampered in the third quarter by a slowdown in new patient
starts, and an increase in discontinuations. But that trend
generally stabilized for the fourth quarter, Biogen said.
Biogen has previously said it expects 100,000 patients to be
using the drug by the end of 2010. But Mullen said Friday that "it
looks like it'll be quite difficult to reach that number by that
date." Some 37,600 patients were using the drug commercially or in
clinical trials as of the end of December. Mullen still expects the
drug to become a blockbuster seller, he said.
The Tysabri sales performance contributed to a 1% decline in
Elan's New York Stock Exchange-listed shares, to $7.93 in recent
trading.
Biogen said Friday the new case of PML was in a European patient
who had been using Tysabri for about 12 months. The patient is
currently hospitalized, and Biogen declined to provide more
specific details. Since the 2006 relaunch, one of the confirmed
cases of PML resulted in death.
Sales of rheumatoid-arthritis treatment Rituxan, co-promoted
with Genentech Inc. (DNA), rose 20%.
Looking ahead, the company sees 2009 earnings, excluding items,
of $4 a share on revenue growth in the "high single digits," above
analysts' projection of $3.99 a share on revenue growth of 9% to
$4.48 billion.
-Peter Loftus, Dow Jones Newswires; 215-656-8289;
peter.loftus@dowjones.com
(Mike Barris contributed to this article.)