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.)