Biogen Idec a Strong Buy on Pipeline Prospects

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Dexpramipexole, an experimental drug to treat Lou Gehrig’s disease, has failed to work in a late-stage clinical trial, the drug’s developer, Biogen Idec (NASDAQ: BIIB) said. Medical experts and patients had hoped it would work to treat the poorly understood and fatal illness. The company said it would discontinue work on the drug because it was not effective in slowing the loss of muscular function nor in prolonging the lives of people with the disease, which is formally known as amyotrophic lateral sclerosis (ALS).  ALS attacks the nerves that control muscles and cause gradual paralysis, usually resulting in death within a few years of diagnosis. About 30,000 Americans have the disease. While expectations were not high that dexpramipexole would succeed in its Phase 3 trial, there was room for some optimism because of what was viewed in some quarters as encouraging results in a smaller, Phase 2 trial. Most analysts had categorized the trial as high risk.

Expanding the Tysabri Market

Biogen Idec and its Irish partner Elan announced that they have submitted an application to the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) requesting an expanded indication that would include first-line use for patients suffering from certain relapsing forms of multiple sclerosis (MS) who have tested negative for the JC virus (JCV) antibodies. It is estimated that 45% of patients fall into this category. The JC virus has a connection to the brain infection, progressive multifocal leukoencephalopathy (PML), a rare and sometimes fatal condition.

Tysabri is approved in more than 65 countries. It is approved in the United States as a monotherapy for relapsing forms of MS, generally for patients who have had an inadequate response to, or are unable to tolerate alternative MS therapies. In the EU it is approved for highly active relapsing-remitting MS in patients who have not responded to beta interferons or have a rapidly evolving, severe condition. The expansion would provide increased access to the drug for patients who are not at risk for developing PML.

The drug is currently approved for patients who have failed other treatment, despite Tysabri’s strong efficacy, because of the risk of PML infection. If approved, a first-line label will allow all appropriate anti-JCV antibody negative patients to use TYSABRI early in the course of treatment.

Factor IX (rFIXFc) Candidate for Hemophilia B

Biogen Idec submitted a Biologics License Application (BLA) to the FDA for approval for the marketing of recombinant factor IX Fc fusion protein (rFIXFc) to be used in the treatment of hemophilia B. RFIXFc provides long-lasting protection from bleeding and reduces the burden of treatment for hemophilia B, which can currently require more than 100 injections every year using commercially-available factor IX products. Fc fusion technology is utilized in seven FDA approved products for the long-term treatment of chronic diseases, which include rheumatoid arthritis, psoriasis and platelet disorders. People with hemophilia B need injections up to three times per week of factor IX to restore the coagulation process and prevent pain, irreversible joint damage and life-threatening hemorrhages.

BG-12 Oral Multiple Sclerosis Candidate

Meanwhile, the most important pipeline catalyst for the company is the regulatory status of BG-12. BG-12, Biogen’s oral multiple sclerosis candidate, is currently under review in both the US and the EU, and a response in the US should be out by March.  BG-12 has the potential to become a leader in the oral multiple sclerosis market once launched. Bank of America Merrill Lynch cut its rating on Biogen Idec to "neutral" from "buy" as analyst Rachel McMinn said in a note to clients that the biotech firm will see limited upside for 2013. McMinn also said there is a likely downside on sales of the company’s BG-12 drug, a treatment for multiple sclerosis and lowered her sales estimate on BG-12 to $275 million from $360 million “to reflect a slower uptake,” but said she continues “to believe in [Biogen’s] favorable long-term profile.”

The Competition

Israeli drug company Teva Pharmaceutical (NYSE: TEVA) petitioned the FDA to delay approval of Biogen’s experimental MS drug known as BG-12 until medical experts review the safety of the treatment, which is set for an approval decision on BG-12 by late March. Sales of Copaxone, an injected MS treatment from Teva, could be affected by the approval of Biogen’s pill, which would be only the second oral treatment for MS approved in the U.S., behind Novartis’ Gilenya.

Wall Street analysts predict BG-12 will be a blockbuster product because it’s effective, convenient, and generally regarded as safe. In its petition, Teva says other drugs such as Gilenya and Biogen’s Tysabri have been shown to have “serious safety issues” following U.S. approval. The FDA has about nine months to respond to a citizen petition, says agency spokeswoman Sandy Walsh. XenoPort (NASDAQ: XNPT) will deliver Phase 3I trial results for its lead pipeline candidate, Arbaclofen Placarbil, early in the second quarter of 2013, and the company is moving forward on re-launching its approved restless leg treatment Horizant in the U.S. The company's candidate, XP23829, will be aimed at treating multiple sclerosis. XP23829 has characteristics similar to Biogen Idec's BG-12 product.

Conclusion

Biogen Idec is a solid performer with over $5 billion in revenues. Its drug Avonex is one of the most prescribed treatments for relapsing forms of MS worldwide. Avonex is indicated for the treatment of patients with relapsing forms of MS to slow the accumulation of physical disability and decrease the frequency of clinical exacerbations. The company's third-quarter revenues increased 8% year-over-year to $736 million. Growth prospects look excellent for the company's existing drugs in the market and its pipeline prospects. Investors looking at the pharmaceutical space should consider buying Biogen Idec.


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