Biogen Idec Has Positive 4Q and ImmunoGen Posts Results

14 February 2005 00:01  [Source: ICB Americas]

Biogen Idec, recently counted among the world’s largest biotechnology companies, reported positive fourth-quarter results, but came up slightly short of analyst expectations. And small-cap biotech firm ImmunoGen Inc. is on track with its fiscal 2005 second quarter performance.

Biogen Idec’s earnings per share (EPS) for the quarter came in at 34 cents on revenues of $586 million. Fourth-quarter EPS fell short of analyst estimates by 2 cents, which analysts say was due to lower-than-expected sales of, and higher-than-anticipated expenses related to the company’s newly launched drug Tysabri (natalizumab). The Food and Drug Administration approved Tysabri for multiple sclerosis (MS) in November 2004.

Revenue performance was driven primarily by strong sales of Avonex (interferon beta-1), Biogen Idec’s older MS drug. Fourth quarter Avonex sales rose 19 percent to $370 million, which was higher than analyst estimates of $364 million. “Ex-US sales were particularly strong at $138 million,” says WR Hambrecht + Co. analyst Jason Kantor, who notes that sales outside the US market came in above the forecast of $129 million. “The strength in ex-US sales [of Avonex] is likely to continue in 2005, as Tysabri is unlikely to win approval in Europe until late 2005.”

Based on strong ex-US sales, Mr. Kantor is raising Avonex’s 2005 sales forecast to $1.47 billion from $1.31 billion.

Meanwhile, 2004 fourth quarter sales of Tysabri, which were around $3 million, were below what analysts had expected. But, they remain optimistic on the drug’s future performance. “Tysabri sales were $3.1 million versus our estimate of $3.8 million; however, actual sales were roughly double this, as Elan books end-user sales,” says analyst Steven Harr with Morgan Stanley. “Investor focus is clearly on the ongoing Tysabri launch in the US. We expect this to be the main driver of stock performance in 2005.”

Analysts say that challenging hurdles still exist to Tysabri’s introduction on the market, but the drug’s launch has generally been good so far. “Demand appears strong and a queue of patients is building for the product. Reimbursement appears to be progressing as expected, and manufacturing capacity is not an issue at this point,” notes Mr. Harr.

“Biogen is making progress in establishing reimbursement and educating physicians, but the lack of Phase III data ahead of the launch is likely to slow both processes. The need to establish [intravenous] access for neurologists is an impediment to initial uptake,” says WR Hambrecht’s Mr. Kantor.

Biogen Idec is maintaining its long-term goal of 15 percent compounded annual revenue growth, and approximately 20 percent compounded annual EPS growth through 2007. “Given the launch investments behind Tysabri, the company is anticipating low double-digit growth for revenue and [earnings] in 2005,” states Biogen Idec. The company announced EPS guidance in the range of $1.60 to the low $1.70s for 2005.

ImmunoGen, reporting on its fiscal 2005 second quarter and half-year results, recorded a net loss of 5 cents per share and 11 cents per share, respectively. However, despite the loss on EPS, the company ended positively with roughly $9 million in revenue for the fiscal second quarter, up from $5.2 million in the same period last year.

“ImmunoGen reported revenue of $9.1 million, above our forecast of $8.9 million, primarily driven by higher-than-expected clinical materials reimbursement. Continued strong clinical material sales indicate partners are using ImmunoGen’s material in larger or more frequent studies,” says Mr. Kantor.

As for the company’s pipeline, Im-munoGen is developing huN901-DM1 TAP, its compound in early clinical development for the treatment of cancers expressing the CD56 antigen. These cancers include small-cell lung cancer, cancers of neuroendocrine origin, and certain hematological malignancies.

In addition, ImmunoGen expects to begin clinical testing of another anti-cancer compound, huC242-DMA TAP, a later version of cantuzumab mertansine, in mid-2005.

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