Biogen's Stronger Than It Looks

I've seen some marginal calls in my time, but I have to think Gary B's call on Biogen(BGEN - Cramer's Take - Stockpickr) is seriously marginal. BGEN bottomed in July at $47.125 and while I'm no technical whiz, I presume that level will act as some kind of support.

Of course, I don't expect to make much on my BGEN long, either, 'cause nobody expects much news from Biogen very soon.

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Sales of Biogen's flagship drug Avonex for multiple sclerosis are pretty steady, making it rather like a pharmaceutical company in that respect. You hear arguments about whether Avonex is taking market share or losing it to competitor drugs like Betaseron, but the fact of the matter is, all those drugs are some form of beta-interferon.

And what that means is that when MS patients get a shot of Avonex or Betaseron or Rebif, they then generally feel rotten, like they have the flu. Patients take the medicine, though, as a leap of faith because MS is a disease that chews through neurons, although the damage may not become apparent for years.

Imagine. It takes a lot of self-discipline when you feel just fine to repeatedly give yourself the flu as preventive medicine for multiple sclerosis.

That said, Biogen's Avonex beta-interferon seems to cause fewer side-effects than competitors' versions. And I say this despite the things competitors Chiron(CHIR - Cramer's Take - Stockpickr) and Serono(SRA - Cramer's Take - Stockpickr) have been doing to muddy the waters. Last week in the Columnist Conversation, for example, I mentioned a goofy study Chiron did of its drug Betaseron vs. Avonex. The study was released at an Italian neurology conference and succeeded in knocking BGEN down more than $3 last Wednesday (which is what triggered Gary B's interest).

The study was tiny (only 188 patients), showed Avonex was better at the six-month mark and was so wacky that it was open-label (this means patients and doctors knew which drug they were using, which allows a huge amount of bias to creep into the results). But because Betaseron kills more skin cells than Avonex does and generates more neutralizing antibodies, too, I and many others consider Betaseron's side-effect profile less desirable than Avonex's.

Now Avonex has a monopoly on U.S. multiple sclerosis patients until 2003, but there's been speculation that Serono, with its competing drug Rebif, might overturn that exclusivity. Serono gets more than a quarter of its product revenues from Rebif by selling it everywhere in the world except the U.S. It has a third of the market internationally. But with $1.1 billion in annual sales, the U.S. is the biggest multiple sclerosis market in the world -- and the competition wants in.

However, the wisest heads I've spoken with say neither Chiron nor Serono has a prayer of breaking Biogen's U.S. monopoly before the 2003 expiration date.

Not that they aren't trying. In addition to Chiron's bizarro study results last week, Serono used data from a study comparing Rebif with Avonex for the application amendment they filed with the Food and Drug Administration yesterday. Again, it's weird, though -- Serono submitted data from a 24-week study, but to get fast-track status with the FDA, it needed 48-week data.

To say "Biogen's competition is really reaching at the moment" seems like a monumental understatement.

Or as a RealMoney reader and physician put it to me:

"As a practicing neurologist, it seems clear that Biogen is the best company that makes multiple sclerosis drugs. Even if their present drug Avonex is not necessarily the best, they will probably be the long-term winner?

"Biogen, if it can maintain its market dominance for two to three years, likely will dominate MS thereafter [ because it is developing next generation drugs that its competitors aren't].

"That does not leave Rebif or Copaxone or Betaseron much time to make inroads. Therefore, you get all these Phase 4 nonscientific "pseudostudies" by all the companies to basically bribe doctors to prescribe them so that they can compete for existing market for the very short term."

As for the other drugs in Biogen's pipeline, nothing is immediate. Amevive for psoriasis has pretty compelling data but also kills off T-cell populations, which makes the FDA very twitchy in the wake of AIDS. Antegren looks promising in humans but doesn't seem to show a dose-response curve, which always makes biotechers nervous. (That's because it could mean many things, including the possibility that Biogen's been giving patients too high a dose of Antegren). As for Adentri, Biogen's drug-in-development with CV Therapeutics(CVTX - Cramer's Take - Stockpickr), I'm not sufficiently up to date to have a useful opinion.

Biogen is holding its annual analysts day the second week of November -- it was rescheduled after the World Trade Center bombings -- and we'll all get an update then. In the meantime, Gary B. may have saved a bundle by staying away from Biogen. But I gotta say, while there are fleas on any biotech stock, Biogen doesn't have all that many.