Biogen profit beats estimates

Tue Oct 31, 2006 10:47 AM ET

By Toni Clarke

BOSTON (Reuters) - Biogen Idec Inc. on Tuesday posted higher-than-expected third-quarter earnings, boosted by strong sales of its drugs for multiple sclerosis and cancer, sending its shares up nearly 6 percent.

The Cambridge, Massachusetts-based biotechnology company said net earnings jumped to $157 million, or 45 cents a share, from $27.2 million, or 8 cents a share, a year earlier, when it took big restructuring and merger charges.

Revenue rose to a higher-than-expected $703 million from $596 million a year ago.

Sales of the company's multiple sclerosis drug Avonex rose 19 percent to $445 million, helped in part by price hikes. Revenue from its joint business arrangement for the cancer drug Rituxan increased 12 percent to $204 million.

Excluding one-time items, but taking into account stock option expenses totaling 3 cents a share, the company earned 57 cents a share. Analysts' average forecast was 47 cents, according to Reuters Estimates.

"It was a fine quarter," said Eric Schmidt, an analyst at Cowen & Co. "Biogen still lacks a sexy new product, but it always helps when you can deliver more profits to the bottom line, and they certainly did that."

Biogen said sales of its recently reintroduced multiple sclerosis drug Tysabri -- which analysts had once expected to bring in billions of dollars -- were $8 million. The company said that to date, more than 2,200 patients are being treated with the drug.

Sales of Tysabri, which Biogen markets with Irish drugmaker Elan Corp. , were suspended in 2005 after the drug was linked to a rare but potentially fatal brain disease.

Biogen raised its full-year 2006 earnings forecast. It said it now expects profit, excluding one-time items, to exceed $2.20 a share. It previously forecast $1.95 to $2.10 a share.

The company said the higher forecast was driven partly by strong sales of its drugs and partly by the fact that it did not spend as much as it expected on acquisitions and other forms of business development.

Biogen said it had spent less than half the $200 million it had set aside for this purpose. Jim Mullen, the company's chief executive officer, told analysts on a conference call that competition to acquire products in late stages of development is intense.

"The most obvious deals have been done," he said. "That is driving up the pricing and valuation in certain sectors, notably oncology."

Biogen said it is considering divesting its cancer drug Zevalin, which recorded sales of just $4 million in the third quarter.

Biogen shares rose $2.59 to $46.50 in early trade on Nasdaq.