has taken down earnings estimates for the second quarter and full year 2002 as the biotech firm ramps up spending to battle a new domestic competitor for its multiple sclerosis drug, Avonex.
The lowered guidance was provided Wednesday as Biogen reported flat profits in the first quarter on Avonex sales that were in line with Wall Street estimates.
In March, Swiss biotech firm Serono received
Food and Drug Administration
clearance to sell its MS drug, Rebif, in the U.S., allowing it to compete directly against Avonex.
To fight Serono, Biogen said Wednesday that it would boost spending for an aggressive sales and marketing effort. As a result, the company expects 2002 earnings to reach a range of $1.70 to $1.78 per share, down from previous guidance of between $1.90 to $2 per share. The new earnings guidance also includes a charge of 10 cents to 14 cents to reflect costs of a new drug partnership with British biotech firm
Biogen also lowered second-quarter earnings expectations to a range of 37 cents to 41 cents per share.
Analysts had been expecting Biogen to earn 47 cents in the second quarter and $1.87 per share in 2002, according to Thomson Financial/First Call, but those estimates were pegged before the Rebif approval in the U.S.
On its conference call this morning, Biogen executives insisted that it's still too early to pinpoint the impact Rebif will have on Avonex's U.S. sales. But the company has stepped back a bit from its worldwide sales guidance for the drug. Biogen now expects Avonex sales in 2002 to grow about 15% to $1.1 billion, compared with a previous forecast that had pegged growth in the 15% to 18% range.
Worldwide Avonex sales grew 28% last year to $976 million, including U.S. sales of $711 million. Many analysts are forecasting flat to minimal U.S. sales growth for the drug, because of Rebif competition.
With Avonex sales growth slowing and facing stiff U.S. competition from Serono's Rebif, the future of Biogen's earnings growth depends even more heavily than ever on the company's ability to get new drugs approved. On May 23, an FDA advisory panel will convene to discuss the efficacy and safety of Amevive, the company's experimental psoriasis drug. Biogen is also developing a second-generation MS drug, Antegren, in collaboration with Elan Pharmaceuticals.
On Wednesday, Biogen added to its drug pipeline by inking a partnership with Celltech to complete development of CDP 571, an experimental drug to fight Crohn's disease, an inflammatory disease that affects the intestinal tract.
Biogen is taking over manufacturing of the drug and will help Celltech complete late-stage tests of the drug, with results expected this summer. If CDP 571 is approved, the two companies will split marketing responsibilities and profits equally.
Biogen's CEO Jim Mullen said he would be surprised if CDP 571, if approved, didn't bring in at least $300 million in sales annually, adding, "Biogen now is positioned to have four products on the market in 2005, by which time we expect to reach our goal of $2 billion in annual revenues."
Getting back to the first quarter, Biogen posted net income of $72 million, or 47 cents per share, flat with year-ago results and matching Wall Street estimates.
First-quarter Avonex sales, worldwide, grew 21%, year over year, to $226 million, including $197 million in the U.S. Avonex sales were aided somewhat by a 3% price increase imposed in January, but were generally in line with Wall Street estimates.
Biogen was up $1.31, or 3%, to $42.85 in early Wednesday trading. Biogen shares have been trading at 52-week lows recently because of the Rebif competition, as well as rising fears that Amevive won't get a positive recommendation from the FDA advisory panel next month.
Many biotech observers are concerned that because Amevive is an entirely new class of drug to fight psoriasis, Biogen may not have enough safety data to satisfy FDA regulators. The issue was raised on today's conference call, and Biogen executives insist that they have done everything possible to answer the FDA's questions.