Biotech Sector Got It Right Last Quarter

Biogen started the second week of earnings by trouncing profit targets with help from its own set of upbeat sales.

In the third quarter, the company reported the first two confirmed cases of brain infection progressive multifocal leukoencephalopathy -- a known risk of the drug Tysabri -- since its relaunch in 2005. The Food and Drug Administration expanded the product's label to include the risk of the infection with the drug when is used alone.

Tysabri sales came in ahead of expectations, but shares declined as investors weighed comments by management regarding Biogen's goal for patients on the MS drug. The company said growth would have to accelerate in order to reach 100,000 patients on the drug by 2010, although it is sticking to the target.

Genzyme(GENZ Quote) beat profit estimates, but it fell short on individual product sales.

Of the big biotechs, Genzyme had the weakest quarter, but that was mostly due to unfavorable foreign exchange translations, said Deutsche Bank analyst Mark Schoenebaum. Foreign exchange added 6 percentage points of growth to Genzyme's revenue in the first half of the year, thus the strengthening dollar stood to negatively affect the company's third quarter.

A Food and Drug Administration advisory panel recently voted to recommend approval of a 2000-liter scale manufacturing facility for Genzyme's Pompe disease drug Myozyme. The agency will meet on Nov. 29 to decide whether to approve the Myozyme that will be manufactured at that scale, but the company warned with its earnings that product supply is expected to remain tight until an even larger-scale (4000-liter) plant is cleared in Europe. That's expected in the first half of next year.