For all the publicity about multiple sclerosis drug Tysabri, investors tend to forget that the real breadwinner so far for Biogen Idec continues to be Avonex, also for multiple sclerosis (MS). Avonex revenues in Q4 2010 were $654 million; Tysabri revenues were $242 million.
Tysabri is the more effective drug, but it has been held back by the risk of PML, progressive multifocal leukoencephalopathy. This is in turn caused by JCV, a virus often quietly, apparently harmlessly residing in human brains. MS is an immune disorder; its treatments involve dialing down the immune system. In about 1 in 1000 patients, JCV wakes up, and instead of being taken care of by the immune system, causes serious damage or even death.
As a result, despite its effectiveness many patients and doctors have only used Tysabri as a last resort.
Now that score should change. The new test will let physicians know which MS patients have JCV and which don't. Presumably, those that don't have JCV could take Tysabri without fear. It is believed that about one-half of potential patients in the U.S. and Europe have JCV, although it is more common in cultures with poor sewage systems.
Those who have JCV can still take Tysabri, but would be closely monitored. So far PML incidents have occurred in patients taking Tysabri for a period longer than 1 year.
New MS therapies are also being developed or marketed, notably Gilenya by Novartis, which is the first oral treatment for the disease, but which was not as effective as Tysabri in clinical trials.
Meanwhile, Biogen is narrowing the scope of its development program, eliminating oncology and cardiovascular candidates to focus on immunology. This should reduce costs in the short run.
Since the quarter ended Fampyra for mobility for MS patients was rejected by the European Medicines Agency (EMA), but Biogen is appealing the decision. Fampyra is approved in the United States. The FDA also approved Rituxan as a maintenance treatment for advanced follicular lymphoma. In the quarter Rituxan generated $258 million.
Because Tysabri can now be "risk stratified," Biogen has stopped enrolling patients in the long-term Surpass trial, which is designed to show off its superior efficacy.
Going forward, Biogen has a lot riding on the questions of whether doctors and patients can put the PML scare behind them, and on whether they will prefer an easy to administer oral drug to the more effective, but harder to administer Tysabri.
See also http://www.biogenidec.com/
Showing posts with label JC virus. Show all posts
Showing posts with label JC virus. Show all posts
Tuesday, March 15, 2011
Wednesday, October 27, 2010
Biogen Idec (BIIB) Deals with JCV
Biogen Idec (BIIB) reported Q3 numbers and held its analyst conference call Tuesday, October 26, 2010. Despite some headwinds revenues rose 5% from Q3 2009. A lot of the value in Biogen lies in the future, in the big, fat Biogen therapy pipeline.
Biogen Idec is my favorite type of stock: a growth and value proposition, with just enough danger to keep me on my toes and keep the risk-adverse (apparently just about everyone right now) away. I own Biogen stock.
Right now Biogen has three big money makers: Avonex, Tysabri, and Rituxan. Avonex and Tysabri are both for multiple sclerosis (MS). In total they generated $847 million in revenue in the quarter. They face twin dangers: the JC virus (JCV), which causes PML, and newer therapies, most notably Gilenya. Can Biogen continue to grow profits while waiting for its future therapies to bear fruit? If so, it is vastly undervalued, because it has a trailing P/E ratio today of about 13. Seen as a growth stock it should climb not just because of climbing earnings per share (EPS), but because the P/E ratio should climb to closer to 25 to 30.
A cure for JCV is not on the horizon, but for its MS patients, what Biogen needs is to be able to screen for the presense of the virus. Tysabri sales have been impacted by JCV, which is usually harmless unless the immune system is compromised. Since MS is a disease in which the immune system attacks the nervous system, cures for it involve suppressing the immune system. In (very approximately) about 1 in 1000 patients receiving Tysabri, JCV gets out of control, which can lead to PML and death. After withdrawing Tysabri from the market when this was originally discovered, it is now back on the market and patients must be monitored for symptoms of PML.
Trials have now showed that about half of MS patients do not harbor JCV, so they should be able to take Tysabri with minimal danger. As to the half that do harbor JCV, it would appear that they now have a 2 in 1000 chance of developing PML. Given how effective Tysabri is for MS, the likely scenario is that after the FDA approves Biogen's screening test for JCV, they will lose some JCV positive patients, but gain a lot more JCV negative patients. That could happen in 2011, but timing is up to the FDA and its equivalent international bodies.
The other threat is oral MS therapies, which are far more convenient for patients and doctors than the current infused therapies like Avonex and Tysabri. The first approved is Gilenya. Biogen claims data shows Tysabri is more effective than Gilenya, so the new drug will go mostly to patients with early, mild MS. But you never no what will happen in the marketplace. Biogen management did not say so, but sadly in the marketplace physicians can charge more for infusions than they can for writing prescriptions for oral therapies.
What I think is going to happen is that Gilenya will cut into the MS pie, but Avonex and Tysabri will continue to be widely prescribed. Patients often rotate therapies, changing them as their disease progresses. Also note that Avonex and Tysabri are still being introduced in many nations, so international sales increases should more than make up for any erosion in the U.S. market.
So for the next few years Biogen's cash from operations, $420 million in Q3 alone, is reasonably assured. Not every therapy in the Biogen pipeline will win FDA approval or become a blockbuster. But so many therapies are in the pipeline that already have good Phase I or Phase II data, I am reasonably confident that in 5 years Biogen will be a much larger company. Risks there are, as I have indicated; don't ignore them, spread them out.
See also:
Q3 2010 Biogen Idec analyst call summary including questions from analysts
Biogen Idec Hemophilia Therapies
Gilenya, Biogen Idec, and MS
Keep diversified!
Biogen Idec is my favorite type of stock: a growth and value proposition, with just enough danger to keep me on my toes and keep the risk-adverse (apparently just about everyone right now) away. I own Biogen stock.
Right now Biogen has three big money makers: Avonex, Tysabri, and Rituxan. Avonex and Tysabri are both for multiple sclerosis (MS). In total they generated $847 million in revenue in the quarter. They face twin dangers: the JC virus (JCV), which causes PML, and newer therapies, most notably Gilenya. Can Biogen continue to grow profits while waiting for its future therapies to bear fruit? If so, it is vastly undervalued, because it has a trailing P/E ratio today of about 13. Seen as a growth stock it should climb not just because of climbing earnings per share (EPS), but because the P/E ratio should climb to closer to 25 to 30.
A cure for JCV is not on the horizon, but for its MS patients, what Biogen needs is to be able to screen for the presense of the virus. Tysabri sales have been impacted by JCV, which is usually harmless unless the immune system is compromised. Since MS is a disease in which the immune system attacks the nervous system, cures for it involve suppressing the immune system. In (very approximately) about 1 in 1000 patients receiving Tysabri, JCV gets out of control, which can lead to PML and death. After withdrawing Tysabri from the market when this was originally discovered, it is now back on the market and patients must be monitored for symptoms of PML.
Trials have now showed that about half of MS patients do not harbor JCV, so they should be able to take Tysabri with minimal danger. As to the half that do harbor JCV, it would appear that they now have a 2 in 1000 chance of developing PML. Given how effective Tysabri is for MS, the likely scenario is that after the FDA approves Biogen's screening test for JCV, they will lose some JCV positive patients, but gain a lot more JCV negative patients. That could happen in 2011, but timing is up to the FDA and its equivalent international bodies.
The other threat is oral MS therapies, which are far more convenient for patients and doctors than the current infused therapies like Avonex and Tysabri. The first approved is Gilenya. Biogen claims data shows Tysabri is more effective than Gilenya, so the new drug will go mostly to patients with early, mild MS. But you never no what will happen in the marketplace. Biogen management did not say so, but sadly in the marketplace physicians can charge more for infusions than they can for writing prescriptions for oral therapies.
What I think is going to happen is that Gilenya will cut into the MS pie, but Avonex and Tysabri will continue to be widely prescribed. Patients often rotate therapies, changing them as their disease progresses. Also note that Avonex and Tysabri are still being introduced in many nations, so international sales increases should more than make up for any erosion in the U.S. market.
So for the next few years Biogen's cash from operations, $420 million in Q3 alone, is reasonably assured. Not every therapy in the Biogen pipeline will win FDA approval or become a blockbuster. But so many therapies are in the pipeline that already have good Phase I or Phase II data, I am reasonably confident that in 5 years Biogen will be a much larger company. Risks there are, as I have indicated; don't ignore them, spread them out.
See also:
Q3 2010 Biogen Idec analyst call summary including questions from analysts
Biogen Idec Hemophilia Therapies
Gilenya, Biogen Idec, and MS
Keep diversified!
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