UPDATE 3-Biogen 3rd-qtr profit rises; Tysabri sales slow

* Biogen Q3 non-GAAP EPS 98 cents, vs 89 cents estimate

* Tysabri sales growth slowed in Q3 from Q2

* Biogen shares fall as much as 4.6 percent

* Revenue rises 38 pct to $1.09 billion

By Toni Clarke

BOSTON, Oct 21 (Reuters) - Biogen Idec Inc (BIIB.O) reported
third-quarter earnings on Tuesday that topped expectations, but
sales of its multiple sclerosis drug Tysabri slowed, sending the
company's shares down as much as 4.6 percent.

Investors have been watching to see the impact on physician
prescribing patterns of Tysabri after the company reported
earlier this year that two patients had developed a deadly brain
infection known as progressive multifocal leukoencephalopathy,
or PML.

On a conference call with investors, Biogen said it is
holding to its projection that 100,000 patients will be taking
Tysabri by 2010, but acknowledged that growth will have to
accelerate if it is to achieve that goal.

Tysabri was temporarily withdrawn from the market in 2005
after it was linked with PML but reintroduced in 2006 with
stricter safety warnings. The two cases announced this year were
the first since it was reintroduced.

Investors are also concerned that Biogen may not be able to
sustain its growth, despite the company's predictions to the
contrary.

That is in part because sales of its multiple sclerosis drug
Avonex were driven in the quarter by price increases. Unit sales
of the drug fell in the United States, though they rose on a
global basis.

"The biggest thing investors are focused on is
sustainability," said Scott Harrison, an analyst at Argent
Capital, which has nearly $1 billion under management and owns
450,000 Biogen shares. "But for folks like us, the longer they
continue to exceed expectations, the longer we will hold the
stock."

Cambridge, Massachusetts-based Biogen said net profit in the
quarter rose to $207 million, or 70 cents a share, from $119
million, or 41 cents a share, a year ago, while revenue rose to
nearly $1.1 billion from $789 million a year ago. The company
reiterated its full-year earnings forecast of more than $3.50 a
share.

Excluding one-time items, the company earned 98 cents a
share. Analysts had expected 89 cents a share, according to
Reuters Estimates.

Avonex sales grew 26 percent to $573 million, and while
sales of Tysabri came in at $171 million, the rate of growth
fell to 18 percent in the third quarter from 25 percent in the
second quarter. The company ascribed the slowdown to a drop in
prescriptions as physicians continue to weigh the drug's risks
versus its benefits.

Biogen said 35,500 patients worldwide are now taking
Tysabri, which it sells with Elan Corp Plc (ELN.I) (ELN.N) of
Ireland. Of those, more than 19,500 were in the United States
and nearly 15,300 elsewhere.

Biogen said it has $2 billion in cash, cash equivalents and
marketable securities, of which roughly a third is in corporate,
mortgage and asset-backed securities. Roughly one-sixth is in
mortgage and asset-backed securities.

Paul Clancy, Biogen's chief financial officer, said the
company plans to lessen its exposure to these securities "in an
orderly fashion."

He said the rest of the company's portfolio is invested in
U.S. treasuries, agencies and money market funds.

Biogen's shares were down 1.2 percent at $46.91 on the
Nasdaq on Tuesday morning, off an earlier low at $45.30.
(Reporting by Toni Clarke; Editing by Steve Orlofsky and
Matthew Lewis)