Biogen profit up; shares soar on drug data

BOSTON (Reuters) - Biogen Idec Inc (BIIB.O) released surprisingly strong results from a clinical trial of its experimental multiple sclerosis drug BG-12 on Thursday, sending its shares up as much as 24 percent to an all-time high.

The Weston, Massachusetts-based biotechnology company said the drug, when given twice a day, cut the annualized relapse rate by 53 percent at two years compared with placebo, and cut the rate of disability progression by 38 percent.

Biogen executives revealed the results on the company's first-quarter earnings call, which showed net profit rose 35 percent to $294 million, or $1.20 a share, from $217 million, or 80 cents a share, a year earlier. Revenue rose 9 percent to $1.2 billion.

If approved, BG-12 could significantly strengthen Biogen's position in the increasingly competitive market for multiple sclerosis drugs. It already sells Avonex, which is injected, and Tysabri, which is infused.

BG-12 is a pill that would compete with Gilenya, a recently-launched pill from Novartis AG (NOVN.VX); and laquinimod, an experimental pill being developed by Teva Pharmaceutical Industries Ltd (TEVA.TA) (TEVA.O) of Israel.

Shares of Teva fell more than 6 percent as BG-12 appears, at least based on initial data, to be more effective than laquinimod. BG-12 cut the annualized relapse rate by 53 percent. Laquinimod cut that rate by 23 percent in its most recently released data. Laquinimod reduced disability progression by 36 percent, less than the 38 percent seen with BG-12.

"BG trial results position it well versus Teva's Laquinimod and other oral drugs," said Aaron Gal, an analyst at Sanford Bernstein.

Multiple sclerosis is a chronic, often disabling disease that attacks the central nervous system and can lead to numbness, paralysis and loss of vision. BG-12 is designed to treat relapsing-remitting MS, in which flare-ups are followed by periods of remission. About 85 percent of people with MS are initially diagnosed with this form of the disease.

No direct comparison can be made between the oral drugs since no head-to-head trials have been completed and the full data set for BG-12 has not been compiled. Data from another late-stage trial of the drug is due to be released later this year.

Still, if data from the most recent BG-12 trial can be replicated, BG-12 could pose a strong threat to Gilenya, which showed a reduction in annualized relapse rate of about 54 percent.

"BG-12 appears to have competitive efficacy with Gilenia, but likely cleaner safety/tolerability," said Bret Holley, an analyst at Oppenheimer.

The most common side effects with BG-12 in a mid-stage trial were flushing and gastrointestinal symptoms such as nausea. Doug Williams, Biogen's head of research and development, said no additional safety problems have been seen in the late-stage trial. About 10 percent of patients in the mid-stage trial dropped out due to side effects.

"Based on the data we've seen so far, if we can replicate it in the next trial, I feel very comfortable that we will have a very competitive drug in the MS space," Williams said.

BG-12 cut the proportion of patients who relapsed by 49 percent at two years, compared with those who took a placebo, meeting the main goal of the clinical trial. The company plans to file for approval of the drug early next year. If it is given a priority review by regulators, it could be on the market by the end of next year.

BG-12 is particularly important for Biogen as uncertainty still hovers over the future of Tysabri, which has been associated with a potentially deadly brain infection known as progressive multifocal leukoencephalopathy, or PML.

Global sales of Tysabri, the company's biggest growth driver, rose 20 percent to $349 million in the latest quarter. Analysts were expecting about $337 million.

Sales of Tysabri in the United States were $170 million, while overseas sales were $179 million.

At the end of March there were 58,400 patients on Tysabri worldwide, up from 56,000 at the end of the fourth quarter.

Sales of its multiple sclerosis drug Avonex rose 8 percent to $642 million.

Excluding one-time items, the company reported earnings of $1.43 a share in the first quarter. Analysts were on average expecting earnings of $1.41 a share and revenue of $1.18 billion, according to Thomson Reuters I/B/E/S.

The company said in February it expects 2011 earnings excluding one-time items to top $5.70 a share and 2011 revenue growth to range between flat and the low single digits. It made no change to its outlook.

Biogen's shares were up nearly 24 percent at $106.94 in mid-morning trading on Nasdaq. Earlier they rose as high as $106.99. Teva's shares were down 6.14 percent at $46.08 on Nasdaq. Earlier they fell as low as $45.68.

(Reporting by Toni Clarke; Editing by Lisa Von Ahn, Dave Zimmerman)