Monday, February 15, 2010

Biogen Idec (BIIB) Revenue Lull

Biogen Idec (BIIB) reported Q4 2009 financial results and held its quarterly analysts conference last week. I used Biogen as an example in my Choosing a Biotech Stock series, and later chose to buy some myself, which I still own.

Biogen is in an interesting phase. Its revenue growth has slowed from the high levels of the past few years, to just 6% from the year-earlier quarter. At the same time, year over year, net income for the fourth quarter rose 48% to $305.6 million (GAAP).

So what is going on? The flat revenue is because Rituxan for rheumatoid arthritis revenues are expiring outside the U.S. Biogen will continue to sell Rituxan inside the U.S.

Compensating for that drop, we still have ramping sales of Tysabri for Multiple Sclerosis, which had revenues jump 39% from year-earlier. Tysabri is still being introduced internationally. It is something of a miracle drug for MS. Tysabri has very good profit margins. Biogen's older MS therapy, Avonex, had revenues up only 5% y/y. Tysabri had scared investors because of cases of PML associated with it, but recently the FDA announced that with Biogen's monitoring program for PML, the benfits of Tysabri outweigh any danger. Biogen is continuing to work to reduce the possibility of PML.

Biogen has an extensive pipeline of drugs that, if approved, could significantly increase its revenues and profits over the next decade. The first possible revenue boost would be from Fampridine for MS. Unlike Tysabri and Avonex, which work by suppressing the immune response that causes MS, Fampridine works by strengthening the signaling of intact nerve cells. It can give patients temporary control of their movements. This is likely to be very attractive to MS victims.

I continue to like Biogen, but its main value is over a long time from of 2 years or more. In the meantime I hope they either use the cash they are generating to pay a dividend or to acquire more quality drug candidates for development.

Analyst conferences coming up this week:

Applied Materials (AMAT) Wednesday
NVIDIA (NVDA) Wednesday

See also:
Q4 2009 Biogen Idec analyst conference summary

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