Biogen Idec Inc said on Wednesday sales of its big-selling new multiple sclerosis drug Tecfidera fell short of Wall Street's lofty expectations, and the company confirmed a serious brain infection in a patient who took the oral medication, sending its shares 7 percent lower.
Biogen reported the first case of progressive multifocal leukoencephalopathy (PML) in a Tecfidera patient, who had been part of a clinical trial and was taking the drug for 4-1/2 years.
The patient, who died of pneumonia, had been suffering severe lymphopenia, a low white blood cell condition, for more than three years, which Biogen said was a risk factor for developing PML.
Biogen, which has notified health regulators of the PML case, said 100,000 patients have taken Tecfidera.
The drug, which has far exceeded expectations since its March 2013 U.S. approval, had sales of $787 million in the third quarter. Analysts, who in previous quarters had watched Tecfidera sail past their sales estimates, were looking for about $800 million.
"We've always expected that Tecfidera's growth rate would moderate over time," Tony Kingsley, Biogen's head of commercial operations, said on a conference call.
Shares of the U.S. biotechnology company fell $22.55 to $304.21 on Nasdaq at mid-afternoon.
While Tecfidera has had a clean safety record throughout its clinical trials and commercial use, PML has long been a concern associated with long-term treatment of MS drugs.
Biogen's injectable MS drug Tysabri was pulled from the market in February of 2005 after three cases of the rare brain infection - two of them fatal - were reported among users.
U.S. health regulators allowed it back on the market with certain restrictions in June 2006 after campaigning by patients who felt the medicine was so effective they were willing to take on the PML risk.
"We think the risk/benefit is clearly still in favor of using Tecfidera for nearly all patients," said RBC Capital Markets analyst Michael Yee.
Biogen reported a higher-than-expected quarterly profit and raised its full-year earnings forecast, primarily on lower business development and research and development spending expectations.
It now estimates 2014 earnings per share of $13.45 to $13.55, up from its previous forecast of $12.90 to $13.10, excluding items.
"For a company that's been beating and crushing numbers, it's hard to see people getting terribly excited about this," Sanford Bernstein analyst Geoffrey Porges said. "You have to wonder if this is the new normal for Biogen or whether they can resume that spectacular growth."
Biogen's net profit jumped to $856.1 million, or $3.62 per share, from $487.6 million, or $2.05 per share, a year ago.
Excluding items, Biogen earned $3.80 per share, exceeding analysts' average expectations by 34 cents, according to Thomson Reuters I/B/E/S.
Revenue rose 37 percent to $2.5 billion, roughly in line with estimates of $2.48 billion.
Tysabri had sales of $501 million, beating analyst expectations of about $485 million.
The company's interferon-based MS drugs, Avonex and new longer-acting Plegridy, had combined sales of $745 million, missing Wall Street estimates of about $767 million.
Avonex has lost market share to Tecfidera. Biogen said 40 percent of patients switching MS treatments have chosen Tecfidera.
"With all of their MS products you have to wonder is there enough incremental revenue to support continued growth or are they just cannibalizing the rest of their franchise every time they launch a new product," Porges said.
(Reporting by Bill Berkrot in New York; Editing by Jeffrey Benkoe, Chizu Nomiyama, Paul Simao and Richard Chang)