Biogen Idec And The Race To Cure Multiple Sclerosis

| About: Biogen Inc. (BIIB)
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Biogen Idec (NASDAQ:BIIB) is one of the most successful biotechs. Founded in 1978, Biogen is the world's oldest and largest independent biotechnology company. Patients all over the world benefit from its multiple sclerosis (MS) therapies, and the company generates more than $5 billion in annual revenues, mostly from the treatment of MS.

The management is confident the company is well on the way to achieving its goals for 2012: to increase Tysabri's market share, stabilize Avonex's market share worldwide, and prepare the company for the launch of BG-12 as a therapy for MS and Factors VIII and IX for the treatment of hemophilia A and B.

Predicted to be number one in MS therapies by 2016

The multiple sclerosis market is currently estimated to be worth $12 billion and is dominated by injectables.

In 2011, Biogen Idec ranked behind Teva as the second highest grossing company in the MS segment by revenue. According to a recent Firstword Pharma survey, by 2016 Biogen may take over Teva's (NYSE:TEVA) number one spot.

While Teva is dependent on a single product, Copaxone, Biogen Idec sells several drugs, including the leading interferon Avonex, the most effective MS therapy Tysabri, and the oral treatment Fampyra, which helps MS patients to walk. Biogen has a deep pipeline with several drugs, such as its potential blockbuster BG-12 and its monthly formulation of Avonex. Biogen also an interest in ocrelizumab, the anti-CD20 monoclonal antibody developed in cooperation with Genentech. .

Oral pills

There is still no cure for the 400,000 people in the U.S. and 2.1 million worldwide who suffer from MS but there is no question that substantial progress has been made.

M.S. was virtually untreatable only two decades ago, but today nine so-called "disease modifying" drugs are helping early-stage patients, and a half-dozen more therapies are in development.

Most patients in the early stage of the disease, a form called relapsing-remitting M.S., take drugs by injection. But polls show newly developed oral drugs could find favor among newly diagnosed patients.

Gilenya from Novartis (NYSE:NVS) was the first oral disease-modifying therapy for MS, and was launched in 2010 in the US and 2011 in Europe. Cardiac problems have been encountered, but the drug is effective and its use is expected to slowly increase as neurologists gain more experience handling the safety issues.

The other oral pill Aubagio from Sanofi (SNY) was just approved by the FDA in September 2012, a possible blockbuster if it can take market share away from some tough competitors.

With that in mind, Sanofi is pricing the drug at $45,000 a year, making it 7% less than Teva's Copaxone and 28% less than Gilenya from Novartis.

Interferons, the drugs most commonly used in relapsing M.S., reduce relapses by about 30%, but do not slow the progression of the disease and disability. The newly approved Aubagio also reduces relapses by about 30%, and has the advantage of being an oral drug.

Not all analysts are bullish about Aubagio's potential. Datamonitor assessed peak sales at $350 million for the top global commercial markets.

Also, Aubagio contains a boxed warning to alert patients to the risk of liver problems, including death, and a risk of birth defects.


Biogen's BG-12, chemically called dimethyl fumarate, is the third oral pill awaiting approval.

In September 2012 scientists published results from two big phase 3 studies. In the studies, called Define and Confirm, patients were randomized into two groups, taking 240 milligrams of BG-12 either twice or three times a day. The combined results showed that the drug reduced the relapse rate by about 50%. There was very little difference between the twice-daily and thrice-daily regimens. As a comparison injecting 40 milligrams of Teva's Copaxone three times a week reduced relapse rates by 34.4%.

The twice-daily dose was also associated with a drop in brain lesions by 71% to 99%, and there was a 38% reduction in progression to disability.

Also, BG-12 delivered a relatively clean safety profile, a big concern in a field now dominated by treatments associated with some severe, and occasionally fatal, side effects. Flushing and gastrointestinal symptoms, like vomiting, were the most common side effects, but tended to taper off after the first two weeks of therapy.

BG-12 has been submitted for approval in the U.S., EU, Australia, Canada and Switzerland, and the FDA may make a decision before year's end.

Current analyst consensus forecasts that BG-12 will emerge as one of the industry's leading growth drivers over the next five years.

BG-12 is an anti-inflammatory drug that works by protecting nerves against injury. It is very similar to one widely used in Germany for the treatment of psoriasis, with a well-known safety track record.

Physicians have suggested BG-12 may be the first oral medication to be approved in the first-line setting that may actually be prescribed as a first-line drug. Currently, injectable drugs are used as front-line treatments because of their well-known safety profile. The two currently approved oral drugs have not been adopted as first-line treatments due to serious safety concerns associated with the drugs.


Biogen's Tysabri increases the risk of progressive multifocal leukoencephalopathy, or PML, a viral infection in the brain that usually leads to death or severe disability, according to a boxed warning the drug's label has carried since 2006.

The FDA recently added a notification to the label saying that patients who have antibodies against the JC virus are more likely to develop PML while taking Tysabri than people who don't. Biogen developed a blood test known as a JCV assay to determine whether a person has the antibodies.

So now doctors can test patients for the risk.

Statistics show that patients who test negative for the antibodies may have 1 chance in 10,000 of developing PML while taking the drug. Without taking the JCV test, the risk is 1.5 in a 1,000 after two years of treatment.

As of February 2011, 102 cases of PML had been reported among 82,732 patients treated with Tysabri worldwide.

According to Michael Yee, an analyst at RBC Capital Markets in San Francisco, the existence of the test may push Tysabri's global sales from $2.5 to $3 billion by 2016. Without it, sales would reach $1.5 to $2 billion that year.

Biogen and Dublin-based Elan split the drug's revenue.

The expected success of BG-12 may mean trouble for Elan.

Unlike BG-12's oral preparation, Tysabri is administered in a hospital or clinic as a one hour IV infusion. Despite rising use of the JCV test, the number of "net new patients" taking Tysabri (new patient starts minus those discontinuing treatment) has been declining over the years on both an absolute basis as well as by percentage. Tysabri, Elan's primary revenue source, may not hold its ground facing BG-12.


Haemophilia is a hereditary genetic disorder that impairs the body's ability to stop bleeding by clotting the blood.

Biogen and its development partner Swedish Orphan Biovitrum have shown positive Phase III data for their long acting haemophilia B treatment rFIXFc. The potential fortnightly dosing provides a significant improvement over the current standard of care, as the drug is longer lasting, and therefore fewer injections are required.

The global haemophilia B market is currently valued at around $1 billion. Pfizer's BeneFIX is considered the gold-standard therapy, with global sales of $693 million in 2011.

By comparison, current treatment guidelines suggest dosing twice weekly with BeneFIX. Half of the patients in the phase III trial achieved twice-monthly dosing. This could mean reducing the number of injections for a patient to between 80 and 140 a year.

The investors's summary

Biogen Idec's second-quarter sales jumped 18% to $1.4 billion, boosted by increased revenue from Avonex and Rituxan. Net income for the period rose 34% year-over-year to $387 million.

CEO George A. Scangos noted that "Avonex performance was particularly strong," with sales of the product rising 16 % year-over-year to $762 million. "There has been strong uptake of the Avonex Pen and Avostartgrip titration dosing kit in both the US and EU," said Scangos.

Also, quarterly revenue from Rituxan (co-marketed with Roche) climbed to $285 million, a 31% increase over the prior-year period.

U.S. Rituxan sales were $784 million, up 5% from the prior year. Performance was solid in the maintenance setting in non Hodgkin's lymphoma, chronic lymphocytic leukemia, rheumatoid arthritis, and the new vasculitis indications.

Biogen's U.S. profit share was $259 million, and royalties and profit-sharing from sales outside the U.S. were $25 million.

Tysabri's worldwide sales were $395 million, an increase of 2% annually. Tysabri is co-marketed with Elan. Biogen's share of the revenue was $280 million. The drugmaker added that by the end of June, approximately 69,100 patients globally were receiving Tysabri.

Biogen's 52-week share price ranged from $87.72 to 157.18. The company's market cap is $35.27 billion. Analysts are mostly optimistic: 16 Buys, 9 Holds and 1 Underperform out of 26 opinions in Thomson/First Call survey.

Biogen Idec is clearly a super investment. The only question is a serious one: how high a price to pay for it?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.