BIOGEN
Updated Feb 7, 2002
| Years |
Dec
2001 |
Dec
00 |
Dec
99 |
Dec
98 |
Dec
97 |
Dec
96 |
Dec
95 |
Dec
94 |
99-01 3-yr
Annual Growth |
| Revenues, mln $ |
1043 |
926 |
794 |
558 |
412 |
260 |
135 |
|
|
| Revenues Growth % |
13 |
17 |
42 |
35 |
59 |
93 |
-4 |
3 |
24 |
| Net Income,excl sp items, mln $ |
291 |
271 |
220 |
139 |
89 |
41 |
6 |
|
|
| Special Items, mln $ |
-30.5 |
+101 |
|
|
|
|
|
|
|
| Earning Growth % |
7 |
23 |
59 |
55 |
120 |
610 |
- |
-67 |
30 |
| Net Profit Margin % |
28 |
36 |
28 |
25 |
22 |
16 |
4 |
- |
|
| Operating Income, mln $ |
360 |
|
|
|
|
|
|
|
|
| Operating Margin |
35 |
|
|
|
|
|
|
|
|
| Operating Growth % |
10 |
|
|
|
|
|
|
|
|
| Gross Margin % |
87 |
86 |
90 |
91 |
93 |
95 |
- |
98.7 |
|
| Return on Equity % |
21 |
30 |
23 |
19 |
17 |
8 |
2 |
- |
|
| Debt / Equity |
|
|
0.05 |
0.08 |
0..12 |
0.13 |
0.09 |
- |
|
| EPS |
1.90 |
1.75 |
1.40 |
|
|
|
|
|
|
| R&D, mln $ |
315 |
303 |
221 |
177 |
146 |
132 |
87 |
|
|
| R&D / Sales % |
30 |
33 |
28 |
32 |
36 |
|
|
|
|
Market Cap.:
7 billion US$
(Oct 24, 2001)
Cash & Short Term Investment:
798 millions US$ (Sep 31, 2001)
Total Assets:
1,721
Long Term Debt:
77
Total Liabilities:
372
Shareholders Equity:
1,349
Price: $51.75
(Feb 6, 2002)
P/E: 28
(based on EPS $1.86, which is the average of EPS in 2000, 2001 and consensus
estimate for 2002)
Profile
- A biopharmaceutical company ranked 211 in Forbes 500 in market value.
- Added to S&P 500 in 2000.
- Revenues in 2001: US$ 1,043 million.
- Biogen was established in 1978. Two founders received Nobel
Prize for their discoveries.
- Major product: AVONEX for treatment of relapsing forms of
multiple sclerosis (MS), a disease not commonly found in tropical regions,
but more in white women ages 20 to 40. AVONEX accounts for
80% of total sales.
- MS is a chronic inflammatory disease of the central nervous system
that affects more than 400,000 people worldwide. In early 2001, more
than 100,000 patients were on AVONEX.
- MS is thought to be a disease in which the body's immune system responds
against myelin, the insulation surrounding nerve fibers, causing its deterioration.
- AVONEX is a man-made interferon to reduce the frequency of
relapses, but it cannot cure MS. Interferon are proteins naturally
produced by the body to help fight viral infections and regulate the immune
system.
- AVONEX was introduced in 1996.
- Biogen expects AVONEX to grow at 16-22% annually in 2003-2005.
- 20% of the sales come from licensees from alpha interferon, hepatitis
B vaccines and diagnostic products.
- In Jan 2002, Biogen expected to have 20% annual growth in EPS in
2002-2005.
- Stock code: BGEN
Does it have a big growing market?
1. AVONEX has been on the market for 5 years. The growth is
expected to slow down. The company is still doing researches on more
new applications for MS based on the success of AVONEX. A
phase III clinical trial called CHAMPS is underway for expanding the use
of AVONEX to different stages of the disease. Expanding the
label would increase the number of patients by about 50%.
2. One new drug is at the final stage of development. Once a
new drug is succeeded and put onto market, there will be a big jump in
revenue.
3. As a very young technology, there will be a lot of scientific breakthrough
in biotech on the way. The industry itself will be growing rapidly
and it is also the kind of business which could provide dreams for investors.
What are its competitive advantages and is it a monopoly type of business?
1. Its leadership in biotech: Biogen is one of the few companies
which have successful genetically engineered drugs on the market.
The huge amount of cash inflow allow the company to make aggressive spending
in product research. It is a big advantage over other smaller biotech
companies and startups which are yet to have profits.
2. The greatest asset is the talent of its scientists.
3. In drug industry, each drug has its well defined market and is protected
by patent. Within the period of having patent, usually 7 years, the
profit margin is well secured.
What is its business model for success?
1. The company is aiming at drugs for those diseases which are hard to
be cured by regular medicines. As protected by patent, the margin
could be set at an extremely high level (gross margin over 90%).
The high return could support a further expansion without borrowing.
2. Pharmaceutical is research driven business. The company
spends a great deal on R&D, 30% of revenues, and the return is explosive
when the drug is succeeded.
Does it have a competition?
- A Swiss biotech drug maker, Ares-Seronno, hhas a same kind of drug called
Rebif. However, it cannot be sold in the US because Biogen has the
right to do so until 2003 under the orphan drug act. Serono's Rebif
is now sold in Europe and Canada.
- Another bio-engineered interferon, Betaseron from Berlex Lab - a
US affiliate of Schering AG, is also available on the US and Europe market
for treatment of MS.
- Competition is also come from a drug called Copaxone marketed by
Tera & Hoechst Marion Roussel. Copaxone's sales expanded 100%
in 1999.
- Immunex is having research on drug for treatment of MS.
- In terms of market share, Avonex, Copaxone, Betaseron and
Rebif rank in descending order.
- In a study led by a UBC professor in 2000, Avonex is the world's
leading treatment for MS.
How strong will the new product be?
There is only one new product, Amevive, at stage 3 in Biogen's pipeline.
It is for the treatment of skin disorder psoriasis. 7 millions Americans
are affected by psoriasis. Annual outpatient costs for treatment
are estimated at between US$ 1.6 and $3.2 billion. So it is a big
market. Biogen expects the market potential of Amevive would
be similar to Avonex.
There are only 3 available internal drug treatment for severe psoriasis
and each has side effects.
For potential competition, there are 2 drugs in Phase III, one from
Genentech and Xoma and one from Bio-technology General and Johnson &
Johnson.
Psoriasis is a chronic, recurring disease recognizable by silvery scaling
bumps and various-size plaques. An abnormally high rate of growth
and turnover of skin cells causes the scaling.
It is believed to be an autoimmune disease, in which the body defenses
against infection attack the body's own tissue. Inflection fighting
blood cells known as T cells go into the skin cells. They release
chemicals known as cytokines that cause the skin to go into overdrive.
New skin cells grow rapidly as if trying to heal a wound that is not there.
Amevive is designed to prevent T cells from being activated,
which occurs when so-called antigen-preventing cells display a protein
that the T-cell recognizes as foreign. The drug disrupts the mating
of the T cell and antigen-presenting cell. The problem is that this
can also affect other T cells, not just the ones aimed at the skin.
In phase 2 trials, an intravenous infusion once a week for 12 weeks
completely cleared the skin of 30% of the patients, with the improvements
lasting 6 to 8 months.
Genentech and Xoma are just entering Phase 3 trials and appear to be
some months behind Biogen. Their drug is a monoclonal antibody that
neutralizes CD-11a, a molecule that is instrumental in helping the T cells
leave the bloodstream and enter the skin. The idea is to keep the
T cells from getting to the skin but allow them to survive in the blood,
where they fight infections.
The drug, for now being called Anti-CD11a, has not had the same problem
with T cell depletion that Amevive has had, but some patients did experience
an immune system reaction called cytokine release syndrome, which produces
flu-like symptoms.
What are its products under research?
| Research Candidates |
Clinical Trials |
Remarks |
| AMEVIVE |
|
|
- Moderate to Severe
Psoriasis, a skin disease |
Filed License Application |
a recombinant LFA-3/IgG1 Human Fusion Protein, is believed to work
by modulating the activities of the memory effector T cells which cause
the disease.
other existing therapies often have long lasting toxicities.
Biogen expects to launch by early 2003 |
| ANTEGREN |
|
|
| - Multiple Scleresis and Crohn's diseases |
Phase III to be started by end of 2001 |
partnered with Elan Corp. |
What are the risks?
1. The company relies totally on one single drug. If no more new
drugs could be put on the market in 2-3 years, the growth will be greatly
damaged.
2. If the current drug has some unknown side effects to the patients,
the company will be in great trouble.
Recent Development:
Useful Links:
www.biogen.com
www.multex.com
www.informedinvestor.com
www.biospace.com
www.fool.com