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Anemic at Biogen


Biotech biggie Biogen (BGEN) may be in for tough times: Analysts warn that the stock, up from 30 in March to 39.89 on May 14, is overvalued, since the fundamentals continue to weaken. Sales of its flagship Avonex, a treatment for multiple sclerosis, have slowed. And rival Serono (SRA)'s new Rebif will benefit from the marketing muscle of Pfizer (PFE) its distributor.

There is also concern over prospects for Biogen's pivotal Amevive, for psoriasis. Sales are hampered by reimbursement problems, notes Adam Walsh of Jefferies. Many insurers still won't cover Amevive. What's more, Amevive, administered intravenously, will face stiff competition from Amgen (AMGN)'s Embrel and Genentech (DNA)'s and Xoma (XOMA) Raptiva. Both drugs are expected to get the O.K. soon. Walsh says the rivals are likely to prevail because of their efficacy, fast response, and convenient application by injection. Walsh has downgraded Biogen from a hold to "underperform" and expects earnings of $1.80 a share in 2003 and $1.87 in 2004, vs. 2002's $1.59. Biogen stock isn't cheap, either. It has gone up 28% in the past month, and its price-earnings ratio relative to growth rate is much higher than its peers.

Biogen doesn't deserve such a premium, says Walsh, considering the dimmed prospects for Avonex and Amevive. Sapna Srivastava of ThinkEquity Partners, rating Biogen "underweight," sees the stock falling to 31 this year. A spokesman says Biogen expects Avonex' sales to accelerate in 2003, and Amevive is "on track with our benchmark for the year."

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial


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