rick.
a little more meat here in this MSNBC piece including a nebulous comment on IDPH. well, at least he did his homework.
-chris.
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Oct 22 1999 3:41PM ET
Biogen Pipeline Springs A Leak
by John W. Schoen
Senior Producer
MSNBC
cnbc.com
Biogen's {BGEN} news that it's scrapping clinical trials for a promising new drug, Antova, leaves a big hole in the company's pipeline. The question investors are trying to sort out is -- just how big is that hole?
The company's stock got hammered Friday losing more than 12 percent at the open after the announcement late Thursday brought a wave of analyst downgrades.
The reason: Antova had looked like a potential blockbuster. Also known as anti-CD40, the drug is designed to block the body's rejection of organ transplants and as a treatment for a variety of autoimmune diseases.
But early stage trials for treatment of hemophilia, diabetes and multiple sclerosis were halted after a few patients experienced potentially fatal blood clots. The company will continue to pursue separate Antova trials already underway for treatment of kidney transplant rejection, lupus and Immune Thrombocytopenic Purpura, or ITP, a rare condition in which the body rejects its own blood.
The company also says its working with the Food and Drug Administration to review the data on blood clotting and hopes to get the trials back on track.
One of the most promising uses could be for the treatment of kidney transplantation, where there are few alternative drugs. But analysts say that what's most troubling is that the clotting problem appears to be basic to the way the drug interacts with blood platelets.
"I'm going forward with the assumption that (the trials) are completely dead," said Albert Rauch at First Union Securities, one of those who downgraded the stock Friday. "It's going to be very difficult for them to get around (the problems)."
Another biotech company, IDEC Pharmaceuticals Corp. {IDPH}, is also pursuing development of an anti-CD40 drug, but for fewer indications. Analysts say it's unclear whether the problems that were found in Biogen's trials will also slow development of that drug.
Biogen continues to generate healthy profits from sales of Avonex, a multiple sclerosis drug that does $700 million a year in sales. Gruntal analyst David Saks, another analyst who cut his rating on Biogen, estimates Avonex sales will hit $1.4 billion by 2003.
But growth in that flagship product are tapering off. Franklin Berger at J.P. Morgan, who also downgraded the stock, estimates year-over-year growth of Avonex will slow to 57 percent next year, 37 percent in 2001 and 22 percent in 2002. He says Biogen's recent stock price had reflected hopes that Antova would one day help take up that slack. Other analysts also had high hopes for the drug.
"We expected (Antova) could generate $300 million by 2005 for just three indications," said Rauch. "Renal transplant in itself could have been a $1 billion application."
Still, the company's pipeline is far from empty. Amevive, now in later stages of development for treatment of psoriasis, is thought to be another potential blockbuster that analysts say could generate as much as $1 billion in sales within a few years. But Antova was an important third leg in the company's long-term growth plan.
"This knocks a leg out of the tripod," said Berger. "There's not a whole lot there (in the pipeline) they can use to directly fill that slot."
Despite the sell-off, some Biogen bulls are buying. Elise Wang at Paine Webber is among those with a buy rating who thinks the selling has been overdone. She says that given the lead time involved, it's too early to factor in potential profits from Antova.
"We don't see this as a gaping hole, but it's a setback -– no doubt about it," she said.
Biogen bulls also believe that the company has other pipeline drugs it may be able to accelerate. One of those is Adentri, which is being developed for treatment of congestive heart failure. But that drug is in early stage trials and could take years to bring to market.
Aside from its damaged pipeline, Biogen's stock faces another potential hit in mid-November. That's when a judge is scheduled to give a preliminary ruling in a patent dispute with Schering AG's Berlex Laboratories unit over the manufacturing process used to make Avonex.
At stake is the possibility that it Biogen will owe hefty royalties to Berlex for the use of the process. But the company has already prevailed in a similar patent challenge to in Europe. And even if gets an unfavorable ruling next month, the legal battle will likely continue for some time, analysts say. |
