Biogen Widens Pipeline

Biogen grabbed the chance to collaborate with Ireland's Elan Corp. to share the costs and profits from drug candidate Antegren, a multiple sclerosis and Crohn's disease treatment. Without the deal, Elan's Antegren could have competed with Biogen's current multiple sclerosis success, Avonex, which harvests $750 million a year. The new drug candidate may now extend Biogen's MS treatment franchise after Avonex's government-granted exclusivity expires in 2003. Yet investors ignored Biogen and rewarded Elan on the news. While happy to watch Biogen maintain its MS lead, they want to see a fatter drug pipeline.

By Tom Jacobs (TMF Tom9)
August 18, 2000

Biotech drug maker Biogen Inc. (Nasdaq: BGEN) and Dublin-based Elan Corp. ADS (NYSE: ELN) declared yesterday that they would jointly develop, manufacture, and sell Antegren, Elan's humanized monoclonal antibody intended to treat multiple sclerosis (MS) and Crohn's disease. Elan shares vaulted 11% to close at 59 7/8, a 52-week high, but Biogen hardly budged, up 1/4 to 70 1/2, down slightly from a year ago.

Antegren is currently concluding Phase II clinical trials, the two-year FDA-required tests for drug effectiveness and side effects. The drug could complement and extend Biogen's $750 million-a-year MS treatment Avonex, which in 2003 loses seven-year marketing exclusivity granted under the Orphan Drug Act. Biogen evaluated Antegren's chances and converted this future competition into an ally for a worldwide market of $1.8 billion.

Biogen's ailing drug pipeline
Drug watchers note that Antegren won't be leading an army of drug candidates at Biogen. Safety problems have stalled testing of Antova for lupus and other autoimmune diseases, while Amevive, Biogen's psoriasis treatment now in Phase III trials, isn't dizzying investors with its market potential. Delays also plague Adentri, a drug for congestive heart failure. This may explain why Biogen's $9 billion market cap lumps it with the two currently unprofitable new-era biotech pharmas Millennium Pharmaceuticals (Nasdaq: MLNM) ($10 billion) and Human Genome Sciences (Nasdaq: HGSI) ($6 billion), rather than with Biogen's other long-established biopharma buddies Genentech (Nasdaq: DNA) ($43 billion) and Amgen (Nasdaq: AMGN) ($70 billion). Biogen is clearly losing this sibling rivalry against two powerhouses who respectively sport seven and four candidates in Phase III trials.

Pipelines are hard to evaluate
It's a tough job to value a company's drug pipeline. The 15-year journey from pre-clinical trials to FDA approval and market acceptance presents more costs and risks than trying to suntan in Antarctica: One in 5,000 compounds survives pre-clinical testing to enter clinical trials, after which one in five candidates secures FDA approval. But if Antegren's Phase II results are positive, it may join the 60% of Phase III candidates that secure final approval, and buy Biogen time to fill its pipeline.

Biogen and other long-term biotech investors will focus on Antegren's progress in solidifying Biogen's MS market dominance, while they gauge any candidates for significant non-MS markets.

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