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Biogen Faces High Expectations for MS Drug Study


Investors are anticipating solid, positive study results for an experimental pill to treat multiple scleroris.

There's a very high bar set for Biogen Idec (BIIB), which is on the verge of releasing key study data for an experimental drug.

The release of late-stage clinical trial results for Biogen's multiple sclerosis pill is one of the most eagerly anticipated events in biotech this month. (See Biogen, Teva, Other Drug Makers Face Stock Catalysts in October)

Shares of the big biotech rose 2% to $93.51 in morning trading Wednesday and are up 38% this year. The stock is up today after more detailed data from a previous study on the MS drug, BG-12, showed the treatment was indeed safe and effective. The drug significantly reduced relapses in patients, researchers found. The positive results were widely expected.

There's more intrigue awaiting in the results of another study on the same drug. The soon-to-be-released data has a number of Wall Street analysts predicting that BG-12 (sure to get a catchier name) will be a blockbuster for the company, exceeding $1 billion in annual sales. That study tested the drug against an older treatment, Teva Pharmaceutical Industries' (TEVA) Copaxone.

An oral MS drug would compete with Novartis' (NVS) Gilenya, the first and only pill approved for the disease (other drugs are injected or infused). Introduced to the market in late 2010, Novartis' $48,000 a year Gilenya is on the path to becoming a blockbuster itself. Novartis reported sales of $138 million for the drug through the first six months of this year.

Analysts say Biogen probably will seek US approval for its MS drug in the first half of next year (provided the study data is good), and the product may be sold as early as 2013. Analysts predict the drug's sales may reach almost $1.5 billion by 2015.

Expectations are for a sales launch that would be the most successful of any MS drug in history, says Robert W. Baird analyst Christopher Raymond.

Needless to say, that means Biogen's announced study data this month will be heavily scrutinized. The data for the trial (known as CONFIRM) must decisively back up the results of the earlier trial (called DEFINE). Anything less will be a disappointment, Raymond says. The studies are in the last of three phases of human trials usually necessary for US approval.

At least 13 analysts have buy recommendations vs six holds and two sells. According to one set of estimates, the consensus 12-month price target is a whopping $117 a share.

Raymond has a hold rating on the stock with a 12-month price target of $100. He says the bar is set considerably high for investor expectations.

"If CONFIRM hits, but does not match DEFINE (48 to 53% relapse rate reduction) or does not measurably defeat Copaxone, we fear investors may be disappointed," Raymond says in a note Wednesday morning.

Other analysts note that the stock is off its highs in June, when the shares almost reached $109.

Twitter: @brettchase
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