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Biogen's new MS drug shines in market debut

By Bill Berkrot

(Reuters) - Biogen Idec Inc on Thursday reported sales of its new multiple sclerosis drug Tecfidera had surpassed Wall Street's most bullish forecasts, raising expectations that it will eventually become the dominant oral MS treatment.

In its first quarter on the market, Tecfidera posted sales of $192 million, including inventory stocking. Biogen said about $110 million of the total represented underlying patient demand. Analysts had expected about $66 million, with the more bullish forecasts at about $90 million.

Biogen also reported a much higher-than-expected second-quarter profit and raised its full-year earnings and revenue forecasts.

Its shares, which have already gained more than 50 percent this year on high hopes for the drug, rose as much as 3 percent on Thursday before giving back most of its gains. Biogen last traded up 0.43 percent at $227.58 on Nasdaq.

In a research note, ISI Group analyst Mark Schoenebaum called the initial Tecfidera sales the "holy mother of all launches," and noted that 75 percent of patients had been switched from other medicines.

"About a quarter of the patients are new to disease-modifying therapies or are returning quitters. We are potentially expanding the market here, which is extremely important," Biogen Chief Financial Officer Paul Clancy said in a telephone interview.

The company said no other MS drug had done as well in its first three months on the market.

"We are at the beginning of a new era for Biogen Idec," said Chief Executive George Scangos.

Tecfidera is the third oral MS drug to market after Gilenya from Novartis and Sanofi's Aubagio, but is widely expected to dominate the class.

Analysts consider the drug Biogen's most important future growth driver and forecast eventual peak sales in excess of $3 billion.

Biogen told analysts on a conference call that 3,500 physicians had prescribed Tecfidera so far. It cautioned, however, that while sales will remain strong, they are likely to moderate once initial pent-up demand is satisfied.

The company said Tecfidera will also require strong and sustained marketing efforts in the highly competitive MS field. It expects the drug's European launch will be further delayed as the company works to ensure long-term patent protection there, and did not anticipate any meaningful EU Tecfidera revenue this year.

It has already been approved in Canada and Australia.

PATIENTS SWITCH FROM OLDER MS DRUGS

For Biogen's two older MS drugs, second-quarter sales rose 2 percent to $774 million for Avonex and fell 2 percent to $387 million for Tysabri. Its share of sales of the cancer drug Rituxan for the quarter was $289 million.

The company called it a challenging quarter for Tysabri, but noted that two-thirds of the patients who discontinued its use had done so to switch to Tecfidera.

Based on the past experience of long-term Tysabri users who switch to alternative medicines, Biogen said it anticipates seeing some cases of a rare but serious and potentially fatal brain infection known as PML to crop up in some those new Tecfidera patients.

Earlier this week, there were reports of a women who had died of a form of pneumonia two and a half weeks after she had stopped using Tecfidera due to gastrointestinal side effects.

The company reiterated that her death was highly unlikely to be connected to the drug.

The biotechnology company said net profit rose to $491 million in the quarter, or $2.06 per share, from $387.1 million, or $1.61 per share, a year earlier.

Excluding one-time items, such as a legal settlement charge, Biogen earned $2.30 per share, topping analysts' average expectations by 37 cents, according to Thomson Reuters I/B/E/S.

Biogen now expects full-year 2013 earnings of $8.25 to $8.50 per share, excluding items, up from its prior forecast of $7.80 to $7.90. The company also anticipates full-year revenue growth of 22 percent to 23 percent, up from previous expectations of 16 percent to 18 percent.

Revenue rose 21 percent to $1.7 billion, exceeding Wall Street estimates of $1.62 billion.

Biogen expects to gain U.S. approval for its long-acting hemophilia drug Eloctate in the second quarter of 2014. It also has under regulatory consideration a second long-acting hemophilia drug and an interferon for MS that only needs to be injected every two weeks or once a month.

"We have the potential for three new therapies to be launched in 2014," Clancy said.

(Reporting by Bill Berkrot; editing by Jeffrey Benkoe, Maureen Bavdek, Lisa Von Ahn and G Crosse)

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