UPDATE 4-Biogen 1st-qtr profit, Tysabri sales disappoint

Tue Apr 20, 2010 11:41am EDT

* Biogen 1st-qtr profit falls on one-time charges

* Global net sales of Tysabri up less than expected

* Shares down 2.4 percent near midday (Adds CFO comment on forecast, updates share price)

By Toni Clarke

BOSTON, April 20 (Reuters) - Biogen Idec Inc (BIIB.O) said on Tuesday that first-quarter earnings fell 11 percent, hurt by one-time charges and lower-than-expected sales of its multiple sclerosis drug Tysabri.

Global sales of Tysabri, the company's most important growth driver, rose 28 percent to $292 million. Analysts had expected sales of about $306 million.

Tysabri was temporarily withdrawn from the market in 2005 after it was associated with a potentially deadly brain infection known as progressive multifocal leukoencephalopathy, or PML.

It was brought back in 2006 with stricter safety warnings, but safety concerns have continued to dampen sales.

Biogen executives told analysts on a conference call that Tysabri sales growth nay have been hurt by a recent update to the drug's label to reflect an increased risk of PML with longer-term use.

But the company said growth picked up again in March, with 190 new patients starting on Tysabri per week, compared with 125 per week in January and February.

Net earnings in the quarter fell to $217 million, or 80 cents a share, from $244 million, or 84 cents a share, a year earlier.

Excluding one-time items, the company earned $1.08 a share. Analysts had on average expected earnings of $1.13 a share, according to Thomson Reuters I/B/E/S.

Revenue rose 7 percent to $1.1 billion. Analysts were expecting revenue of $1.12 billion.

"Overall we thought the quarter was disappointing, particularly on the Tysabri trends," said Geoff Meacham, an analyst at J.P. Morgan, in a research note.

The company left its 2010 guidance unchanged, but conceded it faces challenges for the remainder of the year. The new healthcare reform bill, for example, will require it to provide bigger discounts to the government for drugs prescribed under the Medicaid program for people with low incomes.

"For us, we estimate a haircut of 2 percent of revenue for 2010, but we're not changing guidance yet," said Paul Clancy, Biogen's chief financial officer, in an interview.

In February Biogen said it expects 2010 earnings per share to be above $4.55 before one-time items. It said it expects revenue growth in the mid-single-digit range.

Biogen sells Tysabri with Elan Corp Plc ELN.I. It booked revenue from the drug of $219 million in the first quarter, up 32 percent from the year-ago period.

As of April 6, 46 cases of PML had been diagnosed in patients taking the drug, with 11 deaths.

As of the end of March, about 50,300 patients were on commercial and clinical Tysabri therapy worldwide. That compares with a figure of 48,800 patients as of the end of 2009.

The company is seeking to develop a test that would detect the presence in the body of an antibody to the virus -- known as the JC virus -- that causes PML.

If successful, such a test could ease physician concerns about prescribing the drug, but more work needs to be done before the test can be considered reliably predictive.

In the meantime, experimental treatments from rival companies are moving through the pipeline. Genzyme Corp GENZ.O last week reported data showing its blood cancer drug Campath has the potential to be more durably effective than Tysabri, with more manageable risks.

Sales of the company's multiple sclerosis drug Avonex rose 7 percent to $593 million, helped by a 5.5 percent price increase in the United States in February.

Biogen, which is based in Cambridge, Massachusetts, said it authorized a $1.5 billion share repurchase plan. The company also completed a previous $1 billion share repurchase program announced during the fourth quarter of 2009.

Last month, the company came to an agreement with activist investor Carl Icahn, under which Icahn gets a seat on the board in return for abandoning his threatened proxy fight. Icahn will now have three representatives on the board.

Jim Mullen, the company's chief executive, will be retiring this year. He said a search committee is actively seeking a replacement.

Biogen's shares were down 2.4 percent at $53.50 on the Nasdaq near midday on Tuesday. (Reporting by Toni Clarke, editing by Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)

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