With about 2,300 new patients starting Tysabri (natalizumab) in the first quarter, Biogen Idec appears to have weathered the most recent safety scare for the multiple sclerosis/Crohn's disease therapy.

"We have seen signs of success in turning Tysabri around. Leading indicators have been positive in the second half of the quarter, compared to the first half, a hopeful sign for continued strength and acceleration of patient additions as we move past the nadir in January and early February," Biogen CEO Jim Mullen said during the firm's April 16 first quarter sales and earnings call.

The 2,300 new patients added during the first quarter of 2009 are still a marked contrast to the 5,000 patients added between the end of 2007 and the first quarter of 2008 - before two new cases of progressive multifocal leukoencephalopathy were discovered in July 2008. Between the third quarter of 2008 and the end of 2008, roughly 2,100 patients were added.

The total number of patients taking the monoclonal antibody for relapsing forms of multiple sclerosis or Crohn's disease now stands at 39,900. That count comprises 20,800 patients in the U.S. on commercial Tysabri therapy as of the end of March, plus 18,500 patients outside the U.S. and about 600 patients now in global clinical trials.

"To date, the safety data continues to support a favorable benefit-risk profile for Tysabri," the firm reiterated - part of Biogen's continuous effort to put out the message that the PML risk is in hand. That was a key focus of Biogen's recent R&D overview, where execs revealed data that show the risk of developing PML is more like 1:4,000, instead of 1:1,000 as it was thought to be at the time of Tysabri's reintroduction to the U.S. market in 2006 (¹ Also see "Biogen Seeks Tysabri Magic TOUCH Again: REMS Allows Rapid PML Response" - Pink Sheet, 30 March, 2009., p. 3).

The most recent Tysabri update, posted on the firm's Web site April 17, lists one new confirmed case of PML - bringing the total number cases since the reintroduction to six. The most recent case is listed as confirmed April 15, but was not mentioned on the April 16 call. The case, which was in an ex-U.S. patient treated for MS, occurred after 31 months of therapy.

Analysts are hopeful about Tysabri's recovery, too, but remain concerned. "Revenue per patient was down for the third straight quarter and is now $5,776, down from $5,876 in 4Q08 and $6,810 in 3Q08," according to J.P. Morgan's Geoffrey Meacham. He suspects that some patients are skipping doses or deferring treatment. If this pattern continues it could stall Tysabri re-acceleration, especially with several new MS treatments waiting in the wings.

Supply of Tysabri should be plentiful, however. On April 16, the same day as the earnings call, FDA approved the company's high titer production process for Tysabri. That second-generation process will boost yields of the protein four-fold, according to the firm. It will be used to manufacture Tysabri at the firm's plant in Research Triangle Park, N.C. It was approved by the EU last December.

Sales still missing estimates

At $227 million in worldwide end-user revenue for the quarter, Tysabri, which Biogen Idec markets with Elan, missed Wall Street consensus figures ($246 million) by about 7 percent.

Biogen's flagship MS product Avonex (interferon beta-1a) posted total worldwide sales of $555 million. That missed Wall Street consensus figures ($573 million) by 15 percent. While growing 4 percent year over year, total sales were down 2 percent from 2008's fourth quarter figure. Biogen said a $30 million foreign exchange hit hurt Avonex numbers.

Biogen saw a stronger performance for its key oncology brand. Rituxan (rituximab) revenues grew 13 percent year over year, to $279 million for the quarter. Biogen plans to file later this year in the U.S. and EU to expand the Rituxan label, adding data from new studies in chronic lymphocytic leukemia.

The firm's overall earnings were better than expected, but that's because the firm got a $20 million one-time tax benefit and its operating expenses were lower than expected.

Recession takes a bite out of biologics

The recent economic downturn is cutting into sales of some marketed pharmaceuticals, and Mullen said Biogen's products are no exception. "We have seen signs of modest impact in our business from the downturn, such as increased requests for free and subsidized products, and financial stress of a few of our supply chain partners," he noted.

The current financial headwinds are hurting big-ticket biologics the most. With this recession, more patients are having trouble coming up with out-of-pocket cash, Abbott execs said April 15 during that firm's first quarter sales and earnings call. Sales of Humira (adalimumab) fell $75 million short of the firm's projections. And Amgen, maker of competing anti-TNF compound Enbrel (etanercept) is expected to post less than stellar U.S. sales for that product at its April 23 first quarter report (² Also see "Likely Sales Slump Puts (Still More) Heat On Amgen’s Denosumab To Win" - Pink Sheet, 16 April, 2009.).

A robust pipeline, at a robust price

Another central message of Biogen's presentation of its first quarter performance, building on the March 25 research overview, was the state of the firm's R&D efforts.

At the R&D day, the firm put on a particularly thorough and detailed briefing, putting its research scientists front and center to highlight the depth and range of its development portfolio. Biogen has 20 programs in Phase II and beyond, and will have nine registrational programs ongoing by year end.

During the earnings call, the firm touted its late-stage pipeline's number one position in a recent Moody's ranking. Among 12 large U.S.-based pharmaceutical and biotech companies, Biogen ranked highest in late-stage pipeline quality and in the top third on pipeline diversity.

Biogen's R&D spend, at 26 percent to 28 percent of earnings, is the highest in the industry. Some analysts and shareholders are highly critical of the big expense, but Biogen believes its aggressive R&D investment is critical to future growth for the firm.

Activist shareholder Carl Icahn, who owns about 5.6 percent of the firm, has been critical of Biogen Idec, especially of the high R&D spend. He filed proxy materials with the Securities and Exchange Commission April 10 in an attempt to expand and add members to the board. Icahn was instrumental in the company putting itself on the auction block last year, but no takers emerged (Icahn later contended that Biogen's board sabotaged efforts to sell the company) (³ Also see "Shareholder Activism As Public Venture Capital? In Some Cases, It’s Icahn’s Approach" - Pink Sheet, 16 April, 2009.).

The firm ended the quarter with about $2.5 billion in cash and marketable securities.

- Pamela Taulbee (p.taulbee@elsevier.com)

Biogen Idec Says Tysabri Patient Counts Are On The Upswing

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