7
BioTech Stock Report, March 2003
pean regulators.
Nevertheless, we expect results
from a pilot study of Amevivie in pso-
riatic arthritis to be released at the
March 2003 American Academy of
Dermatology (AAD) meeting. The
company expects to initiate a Phase II
study in this indication and a pilot
study in scleroderma by mid-2003. Re-
sults from a pilot Phase II study in
rheumatoid arthritis are expected in the
second half of 2003.
Biogen's next key drug in the
pipeline is Antegren. Antegren is an
anti-alpha4 integrin humanized mono-
clonal antibody, which is being devel-
oped in collaboration with Elan for re-
duction in new brain lesions and slow-
ing of the progression of disease in
multiple sclerosis. Antegren is in two
Phase III trials for the treatment of mu l-
tiple sclerosis. The Phase III program
for Antegren in MS will include two
clinical trials, one examining the anti-
body as a monotherapy (AFFIRM) and
another study testing the drug in com-
bination with Avonex (SENTINEL). All
Phase III trials in multiple sclerosis are
now fully enrolled. The primary end
point of the AFFIRM phase III clinical
trial is determining the efficacy of An-
tegren as a monotherapy versus pla-
cebo or control in slowing of progres-
sion of MS. Secondary end points in-
clude changes in the MS functional
composite, MS relapses and brain le-
sions as measured by MRI. The SEN-
TINEL trial is designed to determine
the efficacy of Antegren in combina-
tion with Avonex. An interim look at
the data in the SENTINEL trial is ex-
pected by year-end 2003 or early 2004
and in the AFFIRM trial in late 2003. If
positive, the product could be consid-
ered for accelerated approval, which
would likely entail a 9-12 month review
beyond. Biogen estimates operating
earnings for 2003 of about $1.63 to
$1.78 a share, excluding one-time ex-
pense items. Wall Street's average
earnings estimate is $1.68 a share on
revenue of about $1.29 billion for Bio-
gen in 2003. Undoubtedly, this delay
will have an impact on earnings
growth. At one time, the company's
expectation for Amevive was to have
12,000 to 16,000 patients on therapy by
the end of the first year. By the end of
its third year, the company expects
Amevive to achieve annual sales ap-
proaching $500 million. For the com-
pany to achieve its $500 million goal,
Biogen would have to reach a nearly
30% share of the biologic market in the
U.S. and European markets. All in all,
Amevive's future outlook is clouded
and with competition on the horizon it
becomes less clear how the European
scenario will play out. Serono, Genen-
tech's European marketing partner
submitted a marketing authorization
application in Europe in the first quar-
ter of 2003.
European regulators were not con-
cerned about the safety of Amevive,
but wanted the company to conduct
new trials comparing Amevive with
standard psoriasis treatments such as
cyclosporine, methotrexate and oral
retinoids. As far as we are concerned,
it's like comparing apples to oranges.
European regulators also want Biogen
to conduct clinical trials on patients
with severe psoriasis who weren't
helped by existing treatments.
Amevive is a new class of drug being
tested for safety and efficacy. In our
opinion it's unclear why the European
regulators took such a stiff stance on
Amevive, especially since Biogen
claimed to have submitted identical
packages to the FDA and to the Euro-
We believe the market for psoria-
sis medications is large enough for
multiple players; an estimated 1.5 mil-
lion patients suffer from moderate-to-
severe psoriasis in the U.S. with an
equivalent number in Europe. We ex-
pect to see significant overall market
expansion as biologics begin to pene-
trate this novel market, but believe
Amevive may be a second or third
place finisher behind Enbrel and Rap-
tiva over the next couple of years. The
strongest of these competitors will
likely be Enbrel, which is already on
the market for rheumatoid and psoriatic
arthritis, since it has extensive safety
data available and has shown superior
efficacy in Phase II and III studies
compared to Amevive and Raptiva.
The cost of current systemic therapies
for psoriasis is about $5,000 per patient
as compared to the biologics such as
TNF inhibitors that cost approximately
$13,000-15,000 per patient. In our opin-
ion, given the limited efficacy and un-
desirable side effect profiles of current
therapies, this market represents a ma-
jor multi-hundred-million dollar market
opportunity for specific agents. Pa-
tients and physicians will benefit from
multiple drugs with different mecha-
nisms of action and different modes of
administration.
On February 20, Biogen delivered
bad news. The company did not re-
ceive European regulatory approval for
Amevive for the treatment of moderate
to severe psoriasis. The European
regulators requested additional infor-
mation that will require several years
for Biogen to assemble. As a result the
company withdrew its application for
approval. While Biogen indicated the
decision would have no impact on its
2003 financial figures, it will be evaluat-
ing the effect on guidance for 2004 and
