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Biogen Q3 FY07 net profit falls nearly a quarter

Q3 FY07 net profit at Biogen Idec falls 24 per cent as sales of MS drugs failed to live up to analyst predictions

Net profit at Biogen Idec, a US biotechnology company, has fallen 24 per cent as sales of its multiple sclerosis (MS) drugs failed to live up to analyst predictions.

Q3 FY07 net income fell to USD 119.4m, or an EPS of USD 0.41, from USD 156.6m, or EPS of USD 0.45 in Q3 FY06. The results failed to match analysts' EPS estimates by USD 0.06. Even though sales increased 12 per cent to USD 789.2m, compared with Q3 FY06, 21 analysts surveyed by Bloomberg estimated the figure at USD 805m.

MS drugs disappoint
Sales for Avonex (interferon beta-1a) increased 2.2 per cent to reach USD 454.9m. Cowen & Co analysts had predicted sales of USD 470m, however. Tysabri (natalizumab), which Biogen co-markets with Irish-based Elan, posted sales of USD 93m, of which Biogen's share was USD 63m.

Cowen & Co analysts had forecast total sales of USD 98m. About 17,000 patients worldwide are prescribed Tysabri, which is a 21 per cent increase since July 2007. Biogen says this number will increase to 100,000 by the end of 2010.

Biogen has five MS drugs in the pipeline, with five cancer medicines undergoing clinical trials and three in pre-clinical testing. The company is also developing drugs for rheumatoid arthritis (RA), heart disease, Parkinson's disease (PD and haemophilia B.

On 15 October 2007, the FDA extended its review of Tysabri as a treatment for Crohn's disease, delaying a final decision until the end of 2007.

Cardiokine payment
Biogen made a USD 50m payment to Cardiokine in Q3 FY07 for its involvement in developing a drug for use in heart-failure patients. Excluding certain costs, Biogen said it earned USD 0.58 a share, well down on the USD 0.64 average estimate of 20 analysts surveyed by Bloomberg.

Rituxan sales share increases
Biogen's sales share of non-Hodgkin's lymphoma treatment Rituxan (rituximab), which it sells with US-headquartered Genentech, increased 15 per cent to reach USD 235m. Biogen retains approximately a third of US sales for Rituxan and receives royalties on revenue from other regions. The drug is known as Mabthera in the EU and is sold by Roche there.

Buyout looms
Biogen's board said it may sell the company after receiving some interest from potential buyers in early October 2007.

The company, which has long been considered an acquisition candidate by Wall Street, hired Goldman Sachs and Merrill Lynch as financial advisers.

Billionaire Carl C Icahn, who already holds a stake in Biogen of slightly under five per cent, offered USD 23bn for the company, while the Pfizer, GlaxoSmithKline and sanofi-aventis may also bid, according to Sanford C Bernstein analysts.

Were Biogen acquired, the deal would be the largest ever for a biotechnology company, exceeding that between AstraZeneca (AZ) and MedImmune, which was valued at USD 15.6bn.

Elan said on 15 October that it had hired Lehman Brothers Holdings to consider options on the Tysabri agreement which include restructuring, selling its stake, buying out Biogen's stake, or leaving the accord unchanged.

FY07 forecast reiterated
Biogen reiterated its net income forecast for FY07 of USD 1.84 to USD 1.94 a share, not including future purchases or deals.

James Mullen, Biogen Idec's CEO, said in a press statement: "We are well on track to hitting the 2007 financial guidance that we revised upward this summer."

2nd September 2008


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