Biogen Seeking Deals to Expand Pipeline of MS Treatments
Biogen Idec Inc. (BIIB), the world’s largest maker of multiple sclerosis medicines, is on the hunt for new compounds to treat MS and other neurodegenerative diseases, and may purchase companies outright or partner with them, the company’s research chief said.
Biogen is “very actively” reviewing licensing and acquisition possibilities with companies that have drugs in the first two stages of testing needed for regulatory approval, Doug Williams, executive vice president of the Weston, Massachusetts- based biotechnology company, said today in an interview. Treatments for immunology and hematology are areas of interest, he said.
Williams formerly was chief executive officer of ZymoGenetics Inc., acquired last year by New York-based Bristol- Myers Squibb Co. for $725 million. While he declined to comment on specific targets, Elan Corp., based in Dublin, and Acorda Therapeutics Inc. (ACOR), of Hawthorne, N.Y., were listed by Michael Yee, an RBC Capital Markets analyst based in San Francisco.
“We see a lot of things, and people know that we have access to capital to put to use for these types of transactions,” Williams said. “We are recognized as being the leader in the space and have the wherewithal to get transactions done.”
Biogen gained 14 cents to $93.30 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The stock has increased 96 percent in the past 12 months. Acorda rose 15 cents to $31.03. Elan’s American depositary receipts gained 56 cents, or 6 percent, to $9.93 on the New York Stock Exchange. Each receipt represents one ordinary company share.
As of March 31, Biogen had $791 million cash and near-term cash, according to the company.
Acquiring either Elan, with a market cap of $5.5 billion, or Acorda, at $1.2 billion, would make “smart financial sense because these products are low-hanging fruit that add revenue and meaningful profitability, EPS accretion, and generate attractive” return on investment for shareholders, Yee wrote in a May 13 note.
Niamh Lyons, a spokeswoman for Elan, declined to comment on mergers and acquisitions possibilities. Jeff Macdonald, a spokesman for Acorda, also declined to comment.
Biogen is partnered with Elan on the MS drug Tysabri, which generated $900 million in 2010, and Acorda for outside-the-U.S. marketing efforts of Fampyra, which had $133 million in U.S. sales.
MS affects about 2.1 million people in the world, with about 400,000 patients in the U.S., according to the National Multiple Sclerosis Society. The chronic disease attacks the central nervous system and can cause numbness in limbs, paralysis and vision loss. The most-common form of MS is relapsing-remitting, characterized by flare-ups followed by periods of recovery.
Biogen increased 39 percent this year before today, with first-quarter results that showed a 15 percent increase over a year earlier in sales of its Tysabri. On April 21, its MS pill candidate, called BG-12, reduced disability progression and relapse rates more than expected in a study, spurring a 15 percent stock jump.
BG-12 may generate $2.5 billion to $3 billion in annual worldwide sales if approved, more than a previous estimate of as much as $1 billion, Ziad Bakri, a Cowen & Co. analyst, said in an interview in April.
The company plans to offer “a much deeper dive” into BG- 12 data at a medical meeting in Europe in late October, Williams said.
Williams is the second top Biogen executive to signal that the company was actively seeking acquisitions or partnerships. After the BG-12 data were released in April, Chief Financial Officer Paul Clancy said the company was seeking to expand its development pipeline.
“We have a very, very robust late-stage pipeline with BG- 12 kind of being the early read-out as it relates to the seven projects that we have in late-stage,” Clancy said then. “There is nevertheless a need to build the early stage pipeline.”
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