More MS news articles for October 2000

Serono seeks fast U.S. Rebif launch after mixed Q3
Updated 11:29 AM ET October 24, 2000
By Daniel Simpson
ZURICH, Oct 24 (Reuters) - Europe's biggest biotech company Serono said on Tuesday it hoped to bring forward a U.S. launch of multiple sclerosis drug Rebif by a year to tap more than $100 million in extra revenue from the largest MS market.

Serono, whose third-quarter net profit soared on investment income while drugs sales apart from Rebif disappointed, said it would put its beta interferon drug head-to-head with rival Biogen in a bid to win regulatory backing in 2002.

"It's the biggest market for MS and a market which has been the most penetrated by Schering and Biogen," Serono Chief Financial Officer Jacques Theurillat told Reuters.

"There is still growth and for us, one year in advance means a lot of dollars, well above 100 million."

But Serono will have to convince U.S. regulators that Rebif, the fastest-growing revenue-earner of its four recombinant DNA drugs, is safer or more effective than Biogen's Avonex if it is to accelerate a launch that would otherwise come after mid-2003.

Although Serono reported third-quarter net profit rose 83 percent, turnover growth was more sluggish, with top-selling infertility treatment Gonal-F unable to keep pace with past rates and growth hormone drugs Saizen and Serostim selling less.

But Theurillat said its flagship reproductive health unit, the source of over half its revenues, should post double-digit sales growth this year and next, with Gonal-F still the linchpin after third-quarter growth of 11.8 percent in local currencies.

Serono shares closed down 6.5 percent at 1,805 Swiss francs against a broadly firmer Swiss market. The stock, which had risen 13 percent in the previous three days, has outperformed Nasdaq's biotech index .IXB) by 22.6 percent this year.


Revalued stakes in a biotech fund and drug firm Celgene plus $5 million of interest income from a U.S. listing lifted Serono's nine-month profit to $209.9 million, well above analysts' estimates of between $190 and $203 million.

But total nine-month revenues of $846.7 million undershot most forecasts and Zuercher Kantonalbank analyst Meinrad Gyr noted the bulging bottom line masked disappointing revenues.

"The sales growth in the third quarter was more than 10 percent under our forecast," he said in a research note. "Financial income is responsible for the steep rise in profits."

Theurillat said the results had not disappointed, citing a rise in nine-month net profit margin discounting exceptionals to 20 percent from 17 percent and calling the $50 million of extraordinary income proof of shrewd investing and partnerships.

"We have been wise enough to invest in a company in whose techonology we believe," he said, adding that Serono leveraged its research and development budget as well as making money.

Serono's stake in Signal Pharmaceuticals, acquired in 1997, was revalued during the quarter following its merger with Celgene allowing Serono to book $27.2 million in unrealised gains -- a practice some analysts say is confusing.

But together with a $10 million investment in a biotech fund that has yielded gains of $33.5 million in two years, it merely boosted profit figures that were already strong thanks to manufacturing cost savings and higher royalty income on deals.

"That proves we are very strong on technology," he said.

The remaining proceeds from the firm's July listing in the United States -- a key source of capital to attack the biggest biotech market -- were available for acquisitions, he added.

"We continue to look at acquisitions on both sides of the Atlantic," he said. Geneva-based Serono, which struck an inflammatory diseases deal with British Biotech last week, would seek partners in similar fields to its own with "good science and not too massive earnings dilution," he added.