News came Friday that Biogen Idec, Inc. (BIIB) and partner Elan Corp. (ELN) won FDA approval for a label change on its multiple-sclerosis drug Tysabri. Sales of the drug, which annually produces between $1-2 billion worldwide, may double in light of the label change. Amazingly, Biodec may have found a way to come out of what once looked like a messy situation profiting two-fold. In 2005, a safety recall of Tysabri was issued due to three cases of the deadly brain infection Progressive Multifocal Leukooenchepalopathy (PML) in patients taking the drug. Now it appears that Biogen may even benefit from this side effect. Shares of BIIB moved up Friday on this news, near their 52 week high.
Tysabri, an immunosuppressant, may lead to PML in patients who have dormant JC Virus in the brain. By testing for JC antibodies, patients can now be screened for risk of PML allowing for a wider use of Tysabri. A new test marketed by Quest Diagnostics (DGX) and developed by Biogen Idec and Elan, called Statify JCV, can test for the antibody associated with exposure to the JC Virus. If patients test positive for JC Virus antibodies, risk for PML is increased. For the many patients who will test negative for the antibodies, an avenue for Tysabri treatment will be open. To date, 201 cases of PML in nearly 100,000 patients taking the drug had been reported worldwide. Before Statify JCV, determining risk of developing PML in patients was not possible.
Biogen's good news was compounded by the same day release that Novartis' (NVS) competing oral MS drug, Gilenya, is being investigated for potentially causing heart problems after 11 deaths had been reported in Europe. Shares of Novartis fell nearly 4% on the news. Novartis' stumble could be Biogen's benefit, as it has seemingly navigated past its own roadblock with even more in potential profits. Biogen has even received kudos for being a model of how to handle a drug recall while Novartis is just getting into the thick of its issues. Biogen's own oral drug MS, BG-12, is in its late stage pipeline and may get a clearer path to the market hold with Novartis' fumble.
Not all news had been rosy this year however. BIIB had fought criticism earlier this year for radically downsizing its pipeline. Approximately 17 projects were scrapped in 2010. CEO George Scangos matter-of-factly stated that the company didn't want to "fund projects that were unlikely to generate value". It is true that the early stage pipeline, necessary for continued growth, needs replenishing. Biogen has been on the hunt for new talent in its early pipeline focusing on autoimmunity and neurology. Recent partnerships with strong IP companies such as Isis Pharmaceuticals (ISIS), a group with a rich history of orphan status drugs, show BIIB is focused on quality products that are novel in nature.
Biogen Idec, Inc. is my New England Patriots of the biotech sector. It may have taken some hits, but it always seems to manage to come back in the end, though it might not be pretty. Somehow the group takes setbacks and turns them into positives. Biogen's best defense right now is a good offense in its current heavy hitters producing revenue to make up for what it might lack in its pipeline defense. Biogen is plotting its moves, like a scheming Belichick in his hoodie pacing the sidelines. Like Brady and the Patriots, Biogen has some big players right now, but has a keen, realistic eye on the future as its aging offensive stars can't support it forever. As Pats fans have come to know and love though, investments in entities like these often return success now and that expectation moves into the future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.