Biogen Spends the Day on the Defensive - TheStreet

Biogen Spends the Day on the Defensive

The biotech firm is tussling over the efficacy of a pair of its drugs.
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Biotech firm

Biogen

(BGEN)

found itself fighting a two-front war Friday, sending investors running for cover.

The battles started early from the East, when Swiss-based biotech rival

Serono

repeated claims that its multiple sclerosis drug is better than one sold by Biogen. Serono is trying to break into the $1 billion U.S. multiple sclerosis market, where Biogen dominates and earns the bulk of its profits.

Another skirmish broke out from the West later in the day. At a conference in San Francisco, Biogen released results for its experimental psoriasis drug that seemed to show it was less effective in a direct comparison with a rival, experimental drug from

Genentech

(DNA)

and

Xoma

(XOMA) - Get Report

.

Investors were caught in the crossfire. Shares in Biogen sank $6.93, or more than 10.4%, to $59.87 Friday.

On the psoriasis front, the

positive Biogen news released Thursday about its new drug Amevive was quickly buried under a heap of doubt and anger Friday, after the company looked as if it was playing bait-and-switch with some important results

In late-stage tests, Biogen said 21% of patients taking Amevive via a deep-muscle injection were able to reduce their psoriasis symptoms by 75%, a level considered to be the "gold standard" by doctors and regulators.

But on Thursday, a Biogen-sponsored researcher led conference attendees to believe that the number was as high as 33%.

The discrepancy in the numbers comes about because patients were observed and measured at different times. The 21% figure was obtained by measuring patients after 14 weeks, which was the actual clinical goal of the trial. The higher number was obtained by measuring patients at their best point during the 24-week trial, a more relevant way of measuring results, Biogen executives argued.

Unfortunately for Biogen, the only result that seemed to matter to Wall Street analysts was the actual clinical goal, which didn't bode well for the company. The 21% of patients showing strong improvement of their psoriasis symptoms paled in direct comparison to Xanelim, a rival drug being developed Genentech and Xoma. On Thursday, the companies said 39% of patients taking Xanelim were able to reduce their psoriasis symptoms by 75%.

"Thursday, Genentech and Biogen both looked like winners, but Biogen really got hurt today," said one hedge fund manager who attended a Biogen analyst meeting. "The results seem to show clearly that Genentech has the more effective drug; plus it's easier for patients to take." This manager asked to remain anonymous but is long Genentech and has no position in Biogen.

Genentech's drug, Xanelim, is given by a shot just under the skin, while Biogen's Amevive is given either with a deep-muscle shot or intravenously.

Friday's numbers flap will only add more fuel to a raging war between Biogen and Genentech/Xoma over who has the better psoriasis drug. Biogen executives mounted a vigorous defense during their meeting with Wall Street analysts late Friday, claiming that Amevive works against psoriasis in a different way than Xanelim, which makes head-to-head comparisons difficult, if not irrelevant.

Instead of measuring a patient's improvement at just one point in time, Biogen executives argued that it was more realistic and appropriate to count all patients who showed significant improvement, regardless of when that occurred. Their argument was bolstered by support from Mark Lebwohl, chairman of dermatology at the

Mt. Sinai School of Medicine

and the lead investigator for Amevive. "Extensive studies have shown that

Amevive shows great promise as a safe and effective therapy," he said.

But at least on Friday, Wall Street analysts and fund managers didn't seem to be buying it. While most people believe that both drugs will eventually be approved by U.S. drug regulators, at this point at least, Xanelim is believed to be the drug that will be recommended more by doctors. This perception can change, of course, because results from the drugs are still being analyzed and the federal regulators have yet to weigh in with their opinion.

As if Biogen didn't have enough on its hands at the psoriasis conference, it also had to contend with a scrap over its multiple sclerosis drug.

Early Friday, rival Serono said patients treated with its drug, Rebif, had 90% greater odds of remaining relapse free than those taking Biogen's Avonex. Furthermore, 32% fewer Rebif patients suffered relapses compared with patients taking Avonex.

The findings, released at a medical conference in London, basically repeat claims made by Serono in May. Based on these results, the company said it plans to petition "shortly" the

U.S. Food and Drug Administration

to approve the drug, possibly by the middle of 2002.

Biogen's Avonex enjoys "orphan drug" status in the U.S., which blocks competition until mid-2003. To bust through that restriction, Serono must convince the FDA that Rebif is the superior drug. The U.S. market is a juicy target -- Avonex sales are projected to reach $900 million in 2001.

Biogen didn't take today's news lying down. On Thursday, the company obtained an injunction in Swiss court, barring Serono from releasing its results because they were "misleading." Serono violated that injunction, risking a fine and criminal penalties, to make its results public.

On Friday, Biogen executives responded strongly, insisting that the Serono test was "misleading" and "lacked scientific rigor." The results would not stand up to FDA scrutiny, the company added.

"We can only hope that neither individuals with MS, nor their physicians, will be misled by these data released to further commercial, rather than scientific, goals," said Burt Adelman, Biogen's vice president of medical research.

Wall Street analysts have taken a very skeptical stance on Serono's chances of success. In a research note,

Robertson Stephens

analyst Eric Shen said, "Results from Avonex competitor Rebif continue to be of questionable significance."

While the Serono study was positive for Rebif, he added, it did not prove superiority because the six-month length of the study was too short, among other reasons. Shen rates Biogen a buy, and his firm hasn't done underwriting for the company.