Update: Lehman Brothers Downgrade Adds to Biogen's Woes

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(Updated from 8:47 a.m. ET)

Lehman Brothers

downgraded the shares of

Biogen

(BGEN)

to market perform from buy amid worries about the effectiveness and patent potential of two of the company's drugs.

In a research note, analyst Michael Wood cited uncertainties surrounding the patent position of Amevive, Biogen's prospective psoriasis drug, along with concerns that the biotech company's multiple sclerosis drug Avonex may not be as effective as

Serono's

(SRA)

Rebif.

The analyst cut his price target on the stock to $52 from $78. Wood left his estimates for 2001 and 2002 unchanged, but lowered his 2003 revenue projection by $100 million "given the uncertainty surrounding Amevive." He also cut his earnings estimate for 2003 to $2.26 a share from his prior forecast of $2.43.

Additionally,

Prudential Securities

analyst Peter Drake maintained his sell rating on Biogen this morning. "While BGEN shares were off 10% on Friday (from negative news on two fronts), we believe there may be additional downside today due to incremental negative news on Amevive, fully known only after market-close," Drake wrote in a research note.

Switzerland's Serono

presented results last week of a study comparing its own Rebif drug to Avonex. Serono said patients using Rebif had a greater chance of avoiding a relapse than did patients being treated with Avonex. Biogen's Avonex has "orphan drug" status in the U.S., which blocks competition until mid-2003. To break that restriction, Serono must convince the

Food and Drug Administration

that Rebif is the superior drug.

Biogen took a hit Friday, dropping 10.4%. The stock was trading lower still in premarket action this morning.

Lehman had previously downgraded Biogen to buy from strong buy in early April.