Biogen Idec Inc posted second-quarter results on Tuesday that topped expectations, and it increased its full-year profit forecast as it prepares for the expected launch of its highly anticipated multiple sclerosis drug BG-12.
Shares of the company were little changed Tuesday as strong sales of its multiple sclerosis drug Avonex were offset by lower-than-expected sales of its newer MS drug Tysabri.
Paul Clancy, Biogen's chief financial officer, attributed the softer-than-expected Tysabri sales to a dispute with the Italian government over pricing.
Until the dispute is resolved, which Biogen expects to occur in the fall, the company is booking sales from that country at a very low level, Clancy said. Overall, unit sales of Tysabri rose 10 percent in the quarter.
Net profit rose to $387 million, or $1.61 a share, from $288 million, or $1.18, a year earlier.
Excluding one-time items, the company earned $1.82 a share. Analysts were on average expecting earnings of $1.56 a share, according to Thomson Reuters I/B/E/S. Revenue rose a higher-than-expected 18 percent to $1.4 billion.
The Weston, Massachusetts-based biotechnology company raised its full-year profit forecast to above $6.20 a share from a previous forecast of above $6.15 a share. It left its revenue guidance unchanged for growth in the mid-single digits
"We expect this strong commercial execution to sustain enthusiasm about near-and-medium-term growth and maintain recent momentum on Biogen's shares," said Brian Abrahams, an analyst at Wells Fargo, in a research note, "though we believe the stock is close to fairly valued."
Avonex sales rose 16 percent to $762 million, helped by the company's introduction of a more appealing injection device. Analysts were expecting Avonex sales of about $698 million.
Global sales of Tysabri, which is administered once a month by infusion and is the company's biggest growth driver, rose 2 percent to $395 million. Analysts were expecting sales of $419 million.
Tysabri was temporarily withdrawn from the market in 2005 after being linked with a potentially deadly brain infection known as PML. It was reintroduced in 2006 with stricter warnings but safety concerns have remained ever since.
The introduction of a test that can screen patients to better assess their risk of developing PML is providing a degree of reassurance to physicians.
Biogen's shares have risen roughly 70 percent over the past year, largely on optimism about BG-12 which is expected to be approved as early as the end of this year or the beginning of next year.
BG-12 would be the second oral drug to reach the market and would compete with Gilenya, an oral treatment from Novartis AG . Sales of Gilenya rose about 15 percent in the second quarter to $283 million.
That level of growth was stronger than some investors had expected. In April, European and U.S. regulators ruled that the drug should carry stronger warnings about its potential to cause heart problems.
Novartis said it expects sales of Gilenya to exceed $1 billion this year.
Analysts expect sales of BG-12 of $392 million in 2013 and $1.02 billion in 2014, according to Wells Fargo analyst Abrahams.
BG-12, which appears to have a more benign safety profile than Gilenya, is ultimately expected, if approved, to become the leading MS drug on the market.
Investors are also awaiting the release later this year of data from late-stage clinical trials of Biogen's experimental treatments for hemophilia and amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig's disease.
Patients with hemophilia lack, or are deficient in, certain proteins called clotting factors that help stop bleeding. The two main forms of the disease are hemophilia A, caused by a lack of clotting factor VIII, and the less-common hemophilia B, caused by a lack of clotting factor IX.
Biogen's drugs are long-lasting versions of drugs currently on the market and are designed to reduce the number of weekly infusions required by patients to control their disease.
About 18,000 people in the U.S. suffer from hemophilia. About 15,000 of those suffer from a lack of Factor VIII and about 3,500 from Factor IX.
According to Biogen, the global market for short-acting hemophilia drugs is worth about $6 billion - $5 billion for Factor VIII and $1 billion for factor IX, and growing at between 6 percent and 8 percent a year.
The company says its two drugs could be approved in the U.S. by the end of 2013.
In addition, data from a late-stage clinical trial of more than 900 patients of its drug dexpramipexole for ALS is expected later this year. Clancy said it is unclear whether the company will need to conduct a second late-stage trial.
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