Tuesday, December 19, 2006

Color on news: Biogen-Idec (NASDAQ:BIIB)

Couple of firms are commenting on Biogen-Idec (NASDAQ:BIIB) and Genentech (NYSE:DNA) after the FDA issued an advisory that two patients taking Rituxan for systemic lupus erythematosus (SLE) developed and died from progressive multifocal leukoencephalopathy (PML):

- Merrill Lynch notes there have been 23 cases of confirmed PML in patients taking Rituxan for lymphoma and the risk of PML is listed on the drug's label. The firm does not expect these cases to result in any change in sales of Rituxan in its primary indication of Non-Hodgkin's Lymphoma (NHL), which they project will represent about 87% of the drug's sales in 2007. However, there could be a modest slowing of uptake for Rituxan in non-fatal indications such as rheumatoid arthritis or other not yet approved indications of SLE or multiple sclerosis.

The PML was reported as late as 12 months after discontinuing Rituxan treatment in two patients who were being treated off-label for SLE. Also, PML cases have been reported in patients with SLE who have never received Rituxan, likely because patients are receiving one or multiple immunosuppressive drugs and have compromised immune systems. As a result, it is possible that these cases may not be related to Rituxan.

Even if none of the high-risk patients were given Rituxan, ML estimates that the maximum EPS impact for DNA could be $0.03 in 2007, $0.04 in 2008 and $0.06 in 2009. For BIIB, they estimate that maximum EPS impact would be $0.04 in 2007, $0.06 in 2008 and $0.08 in 2009. For now though, the firm maintains their estimates.

- Baird comments on BIIB saying the two SLE patients had longstanding SLE with multiple courses of immunosuppressant therapy prior to receiving Rituxan.

In an 8k, BIIB points out that PML is a known risk in patients who have immune suppression and has previously been reported in SLE patients who were not receiving Rituxan.Firm recalls that Rituxan is not approved for the treatment of SLE. Additionally, they model no revenue in this indication, so they see little material commercial impact here. Reiterates Neutral rating, $55 price target.

Notablecalls: Looks like much ado about nothing. BIIB ended down 2.5 points in aft mkt trading. That looks somewhat excessive. Buying BIIB around the $47.50 level likely presents a good risk/reward oppy. Don't think we will see any downgrades.

No comments: