Biogen Idec (BIIB) Sinks on TYSABRI PML Fears, Wall Street Comments...

August 1, 2008 11:30 AM EDT

Shares of Biogen Idec Inc. (Nasdaq: BIIB) are down 25% today following news from the company and partner Elan (NYSE: ELN) of two confirmed cases of progressive multifocal leukoencephalopathy (PML) in multiple sclerosis patients treated with TYSABRI. PML is a rare and often fatal disease that is characterized by progressive damage or inflammation of the brain.

Here is what Wall Street is saying about Biogen today:

Robert W. Baird said, "We come away from BIIB's Tysabri PML investor call incrementally cautious. We think the opportunity for additional PML cases in the near term could be heightened – and we worry that ABCR (Avonex, Betaseron, Copaxone, Rebif) naïve patients on Tysabri (seemingly not an insignificant amount) could move off therapy, resulting in more than just a slowing of Tysabri growth in coming quarters." The firm reiterated their Neutral rating, $55 price target.

Piper Jaffray said, "While both patients are alive, we point out that in the previous clinical trial experiences of PML caused by Tysabri therapy, death happened months following cessation of treatment." The also said, "Tysabri growth trajectory likely to be derailed, in our opinion. Based on our discussions with physicians (prior to this announcement), we believe that there was a greater level of comfort in the community with respect to Tysabri. While every doctor we spoke with expected additional cases of PML to arise over time, the consensus among them was that these cases would arise after more than 2 years of therapy. " The firm lowered their price target on Biogen from $65 to $53, maintaining their Neutral rating.

Cowen & Co calls it "Deja Vu All Over Again." They said, "Although this disclosure is not shocking, we believe it will prove disruptive to Tysabri's commercial prospects, and the drug's U.S. sales in particular. Given Tysabri has been BIIB's major growth driver, we believe earnings visibility is now lacking. We advise investors to remain on the sidelines until a clearer picture of Tysabri's long-term safety profile emerges." The firm maintains their Neutral rating on Biogen.

Citigroup said, "Worrisomely, the two cases were in patients taking Tysabri as monotherapy and one was naive to prior treatment, defeating the argument that Tysabri's PML cases might have been linked to combination of potent immunosuppressants." The also said, "According to our physician survey conducted in October last year, physicians indicated that they may reduce Tysabri usage by 26% in case there was a PML case. We thus expect slowdown in Tysabri weekly growth rate and possibly scaling back in usage. However, we believe the damage will really depend if this is the first 2 cases of many to come and what the true incidence will be." The firm is maintaining their Buy rating and $76 price target.

BWS Financial said, "Tysabri being taken off the market is unlikely since PML is indicated as a risk on the label. The FDA had indicated expectation of PML occurring again. Additionally, both cases were outside the US, in long-term treated patients, and detected early. Tysabri has been the growth driver for BIIB since coming back on the market. The news of PML could have an adverse effect on the number of patients enrolling to take Tysabri. The total PML cases for the drug, including clinical trials and commercialization, is now five. As the number of patients taking Tysabri for more than 12 months increases could lead to additional PML cases. We are not anxious to downgrade BIIB shares yet, but would do so if Tysabri is taken off the market or if there is a material drop in new patients." The firm is maintaining a Buy rating.

Deutsche Bank notes, "PML w/Tysabri monotherapy & at < 2 yrs likely to renew fears. The new PML cases occurred w/Tysabri MONOTHERAPY vs the cases in clinical trials, where 2 of 3 patients were on concomitant immunosupresives (the 3rd had a history of immunosuprive drugs). Also, both cases occurred prior to 2 yrs of exposure (sooner than the MS cases in trials)." The firm still expect Tysabri to grow to $2B, but near-term growth could slow. The firm lowered their price target on Biogen to $58, maintaining their Hold rating."

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• Piper Jaffray
• Deutsche Bank
• Citi
• Robert W Baird
• BWS Financial
• Cowen & Co

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