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Biotech / Medical : Biogen -- Ignore unavailable to you. Want to Upgrade?

To: Wowzer who wrote (624)	3/20/1998 8:39:00 AM
From: Harold Engstrom	Read Replies (1) \| Respond to of 1686

The recent price rise has me thinking about Biogen's big picture. In the spirit of disclosure... I own Biogen stock. The company itself is on more solid fiscal footing than at any time in its past. Biogen has $450MM in the bank and are adding about $30-$40MM to that sum every quarter. The company locked in the ability to buy its own stock at around $34/share last quarter. Its current accounts show a favorable ratio. The marketing and admistrative workforce was ramped up in preparation for Avonex: now that Avonex is selling better every quarter, the costs of selling and administering the program are declining as a percentage of sales. It appears that the fears that analysts had about Intron A coming off patent in a couple of years may not be realized. Biogen has a good chance of getting its Intron A patent extended another 20 years. Furthermore, Schering-Plough says that it sees double-digit growth for Intron A for the forseeable future - fueled by use on new indications. This means Biogen's royalty revenues may actually accelerate rather than drop off after 2000, especially if VLA4 becomes a winner for Merck. Avonex saw a $10MM quarter-over-quarter increase last quarter and that growth will probably continue: Biogen started selling in France during the last week of December and expects to win approval and pricing in other European and world states throughout the year. Because Biogen's costs are largely fixed, those increases should go straight to the company's pre-tax bottom line. Avonex is also being tested on other indications. LFA3TIP seemed to have a successful trial. Jim Tobin reportedly gave a great presentation at the H&Q conference in San Francisco. He showed slides of psoraisis patients before and after LFA3TIP treatments and they were reportedly quite dramatic. 5C8. Again, Mr. Tobin reportedly lit up when talking about this product. Phase I was tried on IPT for proof-of-concept, and subsequent trials are to be conducted on Lupus. This drug has been described in conference calls as the big product in the pipeline. Biogen appears no less enthusiastic about this anti-CD40L than it did when first discussing its potential. VLA4. Biogen appears to have plans to try VLA4 on a number of indications besides the Asthma indication that it licensed to Merck. Rheumatoid Arthritis and MS are among them. CVT-124. This potassium sparing drug holds great promise for those with severe heart disease. It can break the death spiral that occurs between the heart and kidneys. I believe that Phase IIB is either in progress or will be soon - this was discussed in the last conference call. This product is a sleeper like LFA3TIP - it is out there and maturing but no one seems to notice. I think Dr. Davies said that result for the Ph IIB trial were due this summer. OP-1. Don't know. Biogen hasn't really talked much about this product since the shareholders' meeting last spring. The company owns 5% of CBM and OP-1 data is due out on the bone-healing indication (ph III) this month as is expected to be positive. Gelsolin. Another one that hasn't been talked about much. Biogen seems to feel that there are competing cystic fibrosis treatments that hold enough promise that it may not be worth pushing a lot of resources at this product. It is moving slowly through the clinic, but I suspect Biogen views this product in the light of Hirulog: a potentially superior product but with only potentially incremental benefits over the competition. Biogen would probably sell this product if someone was interested enough. Hirulog. It is possible that Biogen will start receiving some royalties from this product in the future. Biogen has several research partnerships as well. The hope here is that they yield more promising products like 5C8, VLA4 and LFA3TIP. Its gene therapy investment is probably over 10 years away from realizing anything. Overall, the picture is healthy and promising. The stock price seems rich relative to current earnings, but cheap compared to future potential. I count Biogen's potential higher than that of other good research and manufacturing companies because they now have a track record of selecting effective products and shepherding them successfully through the clinic and approval process. They also have top notch manufacturing and appear to have ramped up a very strong marketing and sales force. Biogen has so much money, good earnings, tremendous potential, that I think it may be difficult for it to stay independent. Someone is likely to try to buy Biogen. I hope not, because the company is doing so well with its current management and philosophy.