Biogen & Elan Announce Tysabri Trial

Biogen Idec (BIIB - Analyst Report) and Elan Corporation, plc (ELN - Snapshot Report) recently announced that they are conducting a phase III study of Tysabri for secondary-progressive multiple sclerosis (“SPMS”).

The phase IIIb study, ASCEND (A Study to Characterize the Efficacy of Natalizumab on Disability in SPMS), will evaluate Tysabri’s potential in preventing the worsening of walking, hand movement and daily functioning in SPMS patients. Biogen and Elan plan to enroll 850 SPMS patients from 15 countries in the study. Patients will be randomized to receive either intravenous Tysabri 300 mg or placebo once in every four weeks for a span of 96 weeks.

Tysabri is approved in the US for relapsing forms of multiple sclerosis (“MS”) in patients who show inadequate response to or are unable to tolerate other treatments. In the EU, Tysabri is approved for highly active relapsing-remitting MS (“RRMS”) in adult patients who have severe RRMS or have failed with beta interferon treatment.

On January 20, 2012, Biogen and Elan announced that the US Food and Drug Administration (”FDA”) approved a label change for Tysabri. As per the updated label, anti-JC virus antibody status is a risk factor for developing progressive multifocal leukoencephalopathy (“PML”), a rare and life-threatening brain infection. This step will enable doctors to assess the patients’ risk benefit matrix better.

We are pleased with Biogen and Elan’s efforts to expand the Tysabri brand.

Biogen and Elan have an agreement for the development and commercialization of Tysabri. Under the terms of the agreement, Elan markets the drug in the US and books the entire sales as its revenues. Outside the US, Biogen is responsible for distribution and Elan records its share of the profit or loss on these sales of Tysabri as revenue. This collaboration agreement provides Elan with the option to buy the rights of Tysabri if Biogen changes hands.

Our Recommendation

We currently have a Neutral recommendation on Biogen, which carries a Zacks #3 Rank (short-term Hold rating). Key products Avonex and Tysabri should continue contributing significantly to sales. BG-12 should help drive long-term growth. Meanwhile, Biogen’s restructuring initiative should help drive the bottom line. We are also pleased with Biogen’s intention to streamline its pipeline.

However, we are concerned about the increasing competition in the MS market in the form of Novartis’ (NVS - Snapshot Report) Gilenya which is competing directly with Avonex and Tysabri. The MS market could become more competitive with the entry of oral treatments being developed by other companies.

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