March 2, 1999
Dow Jones Newswires
NEW YORK -- Analysts reiterated buy ratings on Biogen Inc. (BGEN) following the Food and Drug Administration's decision to uphold marketing exclusivity of the company's Avonex drug under the Orphan Drug Act.
The Act offers incentives for the development of drugs to treat rare diseases, granting companies that receive orphan drug status seven years of market exclusivity. Other orphan drugs may be approved in the same indication but must prove to be clinically superior to existing treatments.
The FDA's ruling Monday blocks Serono Laboratories Inc.'s Rebif drug from entering the multiple sclerosis market while orphan exclusivity remains in effect for Avonex, also used to treat multiple sclerosis.
Analysts expect Biogen's period of exclusivity in the U.S. to last through May 2003, renewing their confidence in Avonex's competitive position and sales prospects.
"Right now, Biogen's market share with Avonex in the multiple sclerosis market has been in the 58% to 60% range for about a year. The fact that Rebif will not be reaching the market in the near term makes us more confident that Avonex will be able to grow that share this year," said U.S. Bancorp Piper Jaffray analyst Peter Ginsberg, who reaffirmed his buy recommendation on Biogen Tuesday and raised his 12-month price target to $105 from $90.
Ginsberg, who said he had expected Biogen's exclusivity on Avonex to continue, maintained sales and earnings estimates.
BancBoston Robertson Stephens & Co. also issued a bullish research report Tuesday reiterating its buy rating on the Cambridge, Mass., biotechnology company.
"In our opinion, Avonex should continue to maintain its dominant and rising market share as the most effective treatment for MS," analysts Jay Silverman and Lesley Wright Marino wrote in the report. "As a result, we believe sales and EPS will continue to meet or exceed estimates."
They estimate domestic Avonex sales for 1999 at $382 million and expect sales to rise to $445 million in 2000. They expect Biogen per share earnings to reach $2.55 in 1999 and $3.10 in 2000. In 1998, earnings were $1.80 a diluted share.
Ginsberg's expectations for 1999 are in the same range, at $2.54 a share, but his estimate for 2000 is 10 cents lower, at $3 a share. Worldwide, he estimates Avonex sales of $540 million in 1999 and $620 million for the year 2000.
The FDA did ask Serono, a unit of Ares-Serono SA, for more data on Rebif. The company's president said in a statement that he didn't see any difficulty in responding quickly to the request. "Serono will continue its discussions with the FDA on outstanding orphan drug issues to determine how it can make Rebif available to MS patients as soon as possible," he said.
Serono filed its application for Rebif in February of last year. Last week, Wall Street was expecting the FDA's ruling on the application because the agency usually makes its decisions within a year. Shares of Biogen ran up 6.4% Monday, an increase some analysts attributed to the expected decision. The shares were recently changing hands at 103 1/2, up 1 1/4, or 1.2%.
Avonex is not the only approved drug in the U.S. with orphan status
for MS. Schering AG's Betaseron was first approved in 1993. Avonex was
approved three years later after Biogen proved the drug had fewer side
-Melanie Trottman; 201-938-5287
Briefing Book for: BGEN
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