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Globe 100 | No. 4 - Biogen Idec

The triple play

With three blockbuster drugs, the future seems bright for biotech

Paul Clancy notes Biogen Idec's 'enviable pipeline.' Paul Clancy notes Biogen Idec's "enviable pipeline." (Yoon S. Byun/Globe Staff Photo)
By Robert Weisman
Globe Staff / May 18, 2010

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Executives at Biogen Idec call it their three-legged stool.

The company boasts three drugs — Avonex, Rituxan, and Tysabri — that all rang up sales of more than $1 billion last year, bringing the Cambridge company to the top of the Globe 100 biotechnology list.

“Very few companies can say they have three blockbuster products,’’ said Paul J. Clancy, chief financial officer of Biogen Idec.

Biogen Idec, which has enjoyed six consecutive years of double-digit increases in earnings per share, saw its net income increase 23.9 percent in 2009 on revenue of $4.38 billion.

Tysabri, which is marketed with Elan Corp. to treat relapsing forms of multiple sclerosis, was temporarily pulled from the market in 2005 when three patients died from a rare brain infection.

Today, although small numbers of patients continue to be infected, Tysabri has emerged as the fastest growing Biogen Idec drug in the marketplace, because it has proved effective for reducing relapse rates.

Biogen Idec and Elan are developing predictive tests that could help screen out patients who may be susceptible to infection, potentially boosting the sales growth of Tysabri, said biotechnology analyst Josh Schimmer, managing director at investment bank Leerink Swann.

“Tysabri will remain the real driver of growth for Biogen until their pipeline kicks in,’’ Schimmer said.

He said a progression of new treatments for diseases like multiple sclerosis, rheumatoid arthritis, and hemophilia could start entering the market in the next few years.

Biogen Idec, whose research and development spending rose to $1.3 billion last year from $1.1 billion in 2008, has what Clancy calls “a very enviable pipeline, with over six drugs in late-stage trials.’’ One, BG12, would be the company’s first oral drug for multiple sclerosis, while another is a longer-acting version of Avonex.

“We try to invest in high levels of R&D to drive innovation, and we try to keep operating expenses low elsewhere,’’ Clancy said.

Many of the compounds in Biogen Idec’s pipeline are “high risk and high reward,’’ but some are in therapeutic areas targeted by other biopharmaceutical companies, said Amit Agarwal, partner at Scientia Advisors, a life sciences consulting firm in Cambridge.

“The company has a robust pipeline in number,’’ Agarwal contended, “but unique products which have traditionally differentiated Biogen Idec are still in very early clinical development.’’

Takeover speculation has also helped boost the value of Biogen Idec shares in the past year, as activist investor Carl C. Icahn, a critic of management, won two seats on the company’s board.

The company reached an agreement with Icahn in March to cede him a third seat. That will give his allies a strong voice in selecting a successor to chief executive James C. Mullen, who is departing in June.

A little outside pressure is not necessarily a bad thing, Clancy suggested. “These activist investors are part of a broader industry trend now,’’ he said. “What was unheard of five years ago is now part of the business. Pressure is what creates diamonds.’’

Robert Weisman can be reached at weisman@globe.com.