Biogen Warns on Avonex
Updated from 2:22 p.m. EST
Shares of
Biogen Idec
(BIIB) - Get Report
took another hit Wednesday when the company and the Food and Drug Administration advised doctors of the possibility of liver damage in patients taking the multiple sclerosis drug Avonex.
Avonex produced $1.42 billion in revenue last year, or about 65% of the Cambridge, Mass.-based company's total revenue. Avonex has been on the market since 1996.
The stock fell 88 cents, or 2.3%, to $37.19, after falling as low as $34.30 when the announcement was made in the early afternoon. Trading volume at about 29 million shares was more than four times the daily average for the past three months.
The FDA released a company-written letter to health professionals describing the potential risks that will be added to the drug's label. The new label notes that severe liver injury and cases of liver failure have been reported, albeit "rarely," in patients taking the drug, sometimes in combination with other substances known to harm the liver.
However, this label revision wasn't a black box warning, the most stringent imposed by the FDA.
The announcement represents the second blow to Biogen and its multiple sclerosis franchise. On Feb. 28, Biogen and its partner
Elan
(ELN)
said they were voluntarily withdrawing from the market
their MS drug Tysabri after having discovering one confirmed case of a rare and often fatal nervous system disease among its patients.
The companies subsequently confirmed that a second person contracted the disease. One of the patients died.
Both patients took Avonex plus Tysabri for more than 24 months during a clinical trial. The companies said there were no cases of this rare disease in patients who took Tysabri alone or Avonex alone. (Elan isn't involved in the making or marketing of Avonex). Biogen's stock fell 43% on the day of the Tysabri recall announcement.
Although the stock initially plunged Wednesday on the Avonex news, it regained some value late in the day as at least one analyst suggested that investors were overreacting.
Other MS drugs in the beta-interferon class, including Rebif from
Serono
(SRA)
and Betaseron from Germany's
Schering AG
(SHR)
, "have product labels which reflect risk of altered liver function," says John S. Sonnier of Prudential Equity Group in a brief note to clients on Wednesday.
"Today's news does not change our perspective or our estimates on Avonex," says Sonnier, who has a neutral rating on Biogen. He doesn't own shares; his firm is a market maker in Biogen Idec's stock.
Shares of Schering AG rose 42 cents to $74.30. Shares of
Chiron
(CHIR) - Get Report
, which also sells Betaseron in the U.S., fell 46 cents to $36.03. Shares of Serono slipped 9 cents to $18.53.
And shares of
Teva Pharmaceutical Industries
(TEVA) - Get Report
, which makes an MS drug that is different than the beta-interferon products, lost one cent to $30.60.