Biogen 1Q Profit Up, But Hurt By Purchasing Issue

05/01/2012| 10:54am US/Eastern

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--Biogen earnings rise, but miss Street expectations

--Company cites temporary issues affecting sales of flagship MS drug Avonex

--Company aims higher on full-year financial targets

(Updates throughout with details on results, Avonex sales issues, company comments, stock price.)

 
   By Jon Kamp 
   Of  
 

Biogen Idec Inc.'s (>> Biogen Idec Inc.) first-quarter earnings rose 2.8%, missing Wall Street expectations after the company's flagship drug ran into a temporary wholesale purchasing slowdown in the U.S.

Sales for the product--the multiple sclerosis treatment Avonex--were also nicked by a voluntary recall to deal with an expiration-date issue. Biogen indicated these Avonex issues have been resolved after a short-term impact, however, and the Weston, Mass., biotechnology company aimed its full-year financial guidance toward the high end of prior forecasts.

The biggest focus for Biogen investors lately has been the company's late-stage product pipeline, which includes an experimental pill for MS that could hit the market early next year. The company also has potential treatments for hemophilia and Lou Gehrig's disease that will have data releases from key studies later this year.

Shares slid 1% to $132.69 in recent trading following the company's first-quarter miss. Shares are up about 20% on the year and have been trading around all-time-high levels, however, based on enthusiasm for the future products.

Chief Executive George Scangos kicked off Tuesday's earnings call by discussing the distribution issues with Avonex. The company believes some pharmacy wholesalers made weak orders in January, possibly because of stepped-up purchases in the fourth quarter.

"We believe that the fundamental demand for Avonex remains solid and the January results were the result of isolated events," Scangos said. He added that "sales rebounded quickly with both revenues and units on track in February and March."

Biogen is "quite optimistic about the full year," he also said.

The company reported a first-quarter profit of $302.7 million, or $1.25 a share, up from $294.3 million, or $1.20 a share, a year earlier. Excluding items such as asset amortization and restructuring costs, earnings fell to $1.40 a share from $1.43. Revenue rose 7.4% to $1.29 billion.

Analysts polled by Thomson Reuters had most recently forecast earnings of $1.48 a share on revenue of $1.31 billion.

Avonex sales rose 3% to $661.6 million, but sales of the injectable drug were about $35 million below analyst expectations, ISI Group analyst Mark Schoenebaum said. Most of that--an estimated $26 million--was due to the issues Biogen highlighted.

Sales of the MS drug Tysabri, which is sold with Elan Corp. (ELN), rose 14% to $399 million. Revenue received by Biogen for Tysabri was $286 million, also up 14%.

Rituxan revenue from Biogen's joint venture with Roche Holding AG's (RHHBY, ROG.VX) Genentech Inc. unit, were $285 million, up 11% from a year earlier.

Looking ahead, Biogen now expects full-year earnings, excluding items, of more than $6.15 a share on mid-single-digit revenue growth. The company in January had forecast of $6.10 to $6.20 a share on a low- to mid-single-digit percentage increase in revenue.

--By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

--Melodie Warner contributed to this report.

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