Feb. 13, 2002
By Kim Frick
Serono SA, Europe's largest maker of biotechnology products, said it may win U.S. approval for the multiple sclerosis drug Rebif as early as March. Its shares rose as much as 5.7 percent, the biggest gain in two months.
The Geneva-based company already sells Rebif in more than 70 other countries and estimates that it holds 38 percent of the non- U.S. market. Chief Executive Officer Ernesto Bertarelli had earlier said he expected a mid-year U.S. approval for Rebif.
"They have the leading product in the MS market and it's growing," said Daniele Scilingo, who manages more than 1 billion Swiss francs ($593 million) at Pictet & Cie and owns Serono shares. "The icing on the cake is there's potential for an early entrance into the U.S."
Serono has to start selling Rebif in the U.S. market to keep revenue climbing, analysts and investors said. The country accounts for the majority of sales in the $1.8 billion world MS treatment market, according to analysts.
The company last year spent $30 million to prepare for the U.S. introduction of Rebif. That hurt fourth-quarter profit, which fell to $77 million, or $4.77 per bearer share, from $91 million, or $5.63, in the year-ago period. Fourth-quarter profit in 2000 was also helped by a one-time investment gain. Product sales in this year's period rose 13 percent to $338.4 million.
Fourth-quarter Rebif revenue jumped 48 percent to $110.5 million, about a third of Serono's product sales. To win U.S. Food and Drug Administration approval, the company needs to persuade regulators that Rebif works better than an alternative that has exclusive marketing rights, Biogen Inc.'s Avonex.
"We are cautiously optimistic about a positive FDA decision on Rebif," Chief Financial Officer Jacques Theurillat said in a Bloomberg interview. "Basically we have all the infrastructure to launch the product the day after the approval."
Under a U.S. program that encourages companies to develop medicines for rare diseases, competitors to Avonex aren't allowed on the U.S. market until 2003 unless they are found safer or more effective. Serono recently released a study dubbed "Evidence" that it says shows patients on Rebif have less chance of a multiple sclerosis relapse than those on Avonex.
"The FDA process is going faster than anticipated," said Ivo Staijen, an analyst at Bank Sarasin in Zurich who recommends buying shares of Serono. "I would rate that as a positive."
Shares of Serono rose 57 Swiss francs, or 4.6 percent, to 1,290 after climbing as high as 1,303 earlier. Before today, the shares had declined 15 percent this year on worries about Rebif's U.S. application.
Serono expects to release 12-month data from the Evidence study in April at the American Academy of Neurology meeting in Denver, Colorado.
"We do believe that Rebif will be approved in the U.S.," said Denise Anderson, a pharmaceutical analyst at Bank Julius Baer in Zurich who raised her rating on Serono shares to "hold" from "reduce." "They need Rebif in the U.S. to continue being any kind of a growth company."
For 2002, Theurillat said he expects net income to increase 15 percent on the back of a 15 percent jump in sales in the currencies of Serono's customers.
Fourth-quarter profit was in line with the $78 million expected, on average, by 25 analysts polled by Serono before the report.
(Serono will hold a conference call for investors at 4:30 p.m. Swiss time. Listeners can dial 41-848-22-4111 from Europe and 0-848-22-4111 from Switzerland and 1-412-858-4600 from the U.S.)
©2002 Bloomberg L.P.