fwiw, some press out of cbs.marketwatch (with the standard investment-advice denouement).
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Biogen
A compelling biotech story
By Courtney Smith, CBS MarketWatch
Last Update: 11:05 AM ET Oct 12, 1999
NEW YORK (CBS.MW) -- There are 750,000 people with multiple sclerosis in the U.S. and Europe. Until recently, the best treatments were so poor that only about 6 percent were treated. Then Biogen (BGEN) launched their treatment for MS, Avonex.
The product was so well received that they quickly gained 60 percent market share in the U.S. and 42 percent in Europe. There are now over 75,000 people taking Avonex.
I'm looking for even more growth in sales. Avonex is still the best product on the market and the competition is weak. More doctors are getting comfortable with the product and are prescribing it earlier in the disease cycle.
Rebif from Ares-Serono is the only real competition. However, Rebif has three main problems. First, the side effects are strong enough that it has to be administered in low doses. Second, it has to be injected three times each week, compared to once a week for Avonex.
Finally, the Food and Drug Administration rejected the Ares-Serono application to sell Rebif in the U.S. This means that it will only compete with Avonex in Europe. This gives Avonex clear sailing for at least another four years.
But Avonex isn't the only story. Biogen has a strong pipeline of future products. Next up will likely be Amevive, a treatment for psoriasis that should come to market in 2001. After that should be Antova, a treatment for various auto-immune problems such as lupus and transplantations. Look for Adentri to follow after that for the treatment of congestive heart failure.
Another solid prospect is an inhaled version of Avonex (sure beats getting a shot!) that is being developed with Inhale Therapeutics.
Consistency and future products
This creates a solid and consistent stream of new products. Investors like this kind of consistency, particularly with biotech companies that tend to flash in the pan. They will basically have one new drug on the market per year for the next several years.
While the other drugs are coming on stream, Biogen is developing more indications for Avonex. They have eight clinical trials for such markets as glioma and monary fibrosis.
Financial blockbuster
The sales of Avonex are creating a financial blockbuster. The company announced their quarterly results Oct. 8. Revenues rocketed 43 percent to $208.4 million, and earnings almost doubled to $62 million ($.39 per share) from $37.6 million ($.24 per share) in same quarter last year. Cash flow is growing at roughly the same rate as the earnings.
This growth is being driven without debt. The debt-to-equity ratio is only 7 percent. This means that the company is being very conservative with their balance sheet.
There has been a big run up in the stock this year so the stock is not cheap. It currently trades at 66 times trailing earnings. However, you can see that it is growing earnings at about that rate. In addition, I believe that the market is rewarding companies with strong and consistence earning power and Biogen falls into that category.
I think that the best strategy might be to buy some here and wait for a dip to buy some more later.
cbs.marketwatch.com |
