[Update: 1:55 pm Eastern, 11/20/09] After a bitter standoff earlier this year with billionaire investor Carl Icahn over alleged mismanagement, Cambridge, MA-based Biogen Idec now faces another sharp attack from a major shareholder.

New York-based HealthCor Management, a hedge fund that invests in health and biotech companies, said today in a regulatory filing that Biogen (NASDAQ: BIIB) overpays CEO James Mullen, that his performance has been poor, and that the company has a record of “excessive and fruitless” spending on R&D and little regard for its shareholders. HealthCor portfolio managers Joseph Healey and Arthur Cohen, in a letter dated November 18, urged the board to “revisit” Mullen’s compensation, cut research spending, and start buying back shares to boost the stock price. HealthCor said it holds 3.65 million shares, or about a 1.3 percent stake in Biogen, and it has held a position for more than a year.

HealthCor is urging the board to turn things around by buying back $500 million to $1 billion worth of stock annually. That would reduce the supply of available shares, and increase the value of those that remain on the market.

“We fear that continued acquiescence to the status quo will be viewed as an indictment of the Board’s lack of focus on shareholder value creation,” HealthCor wrote in a letter to the board, which was disclosed to the Securities and Exchange Commission.

[Update with company response, 1:55 pm Eastern, 11/20/09.] Biogen Idec “actively engages with our shareholders and we appreciate their input,” says company spokeswoman Jennifer Neiman. That said, she also noted that Biogen has already done share repurchases worth $5 billion since 2004, and last month its board authorized an additional $1 billion of share repurchases.

HealthCor said in its letter that it has been arguing for changes at Biogen for more than a year. The fund noted that the company’s stock has seen no real growth for six years, and is currently trading near levels seen before the company filed for FDA approval of natalizumab (Tysabri) in 2004. (The stock was selling for $44.26 per share on February 17, 2004, and was at $46.05 at the time HealthCor wrote its most recent letter on November 18, 2009.)

While “investors have been left holding the bag,” in HealthCor’s words, the firm …Next Page »

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Few doctors knew much about a rare brain infection called PML back in 2005, when two patients on a hot new multiple sclerosis drug from Biogen Idec and Elan died from the side effect. The infection, at the time, was generally considered a death sentence. But now with three years of data from more than 60,000 patients worldwide who have taken natalizumab (Tysabri) under strict monitoring by physicians, a new picture is emerging that shows PML is still very much a serious threat, but that it isn’t nearly as deadly as first feared.

While each and every confirmed case of PML, known formally as progressive multifocal leukoencephalopathy, scares investors in Cambridge, MA-based Biogen (NASDAQ: BIIB) and Ireland-based Elan (NYSE: ELN), I sought to assemble a big picture view of exactly how deadly PML really is when I interviewed Al Sandrock last week. He’s the senior vice president of neurology R&D at Biogen, and an assistant clinical professor of neurology at Harvard Medical School.

Before diving too far into the numbers about the risk of Tysabri, a little background is required. This drug, an antibody treatment designed to block certain white blood cells that cause MS when they attack nerves, has a history of also making patients vulnerable to infection. Biogen and Elan yanked it off the market in February 2005 after two cases of the brain disease were confirmed among patients taking the drug; a month later, a third case was confirmed. But legions of patients still demanded the drug, considered to be the most effective medicine on the market at reducing the disabling nerve damage from multiple sclerosis flare-ups. The FDA allowed the drug to return to the market in July 2006 after determining its benefits outweighed the risks, but it also forced doctors into a strict monitoring program to keep an eye out for the early signs of PML.

This matters not just for doctors and patients, but for Biogen’s and Elan’s financial futures. The drug, Biogen’s fastest-growing product, generated $560 million in sales in the first nine months of this year. (The importance of this drug is one reason why investors get so ticked at Biogen when it isn’t exactly forthcoming about every newly diagnosed case, but that’s a bone to pick another day.)

When the drug came back on the market, its FDA-approved prescribing information contained a prominent warning that about 1 out of every 1,000 patients on the drug were likely to get PML. But that was really just a forecast, and the actual risk-benefit balance for this drug is really a moving target that shifts over time when a new case is confirmed. So I sought to build a simple chart when I spoke to Sandrock that provides a snapshot of PML cases in February 2005, when the drug was pulled off the market because of the PML risk, versus those confirmed as of yesterday. Here’s what I gathered:

The February 2005 figures came from clinical trial data and formed the foundation for the FDA-required warning of the 1-in-1,000 chance of getting PML. The more recent figures include all the experience of patients who have gotten the drug since it was returned to the market in July 2006. The thing that jumped out at me was the fact that only five of the 27 confirmed patients with PML have died—meaning that the current survival rate stands at over 80 percent.

That curious fact has been buried under a rash of scary headlines …Next Page »

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[Update: 10/23/09, 1:10 pm Eastern] Shares of Biogen Idec and its Irish partner Elan dropped this morning after European regulators said they are taking a new look at the risk and benefit of natalizumab (Tysabri) for multiple sclerosis, now that 23 patients on the drug have been diagnosed with a rare, potentially fatal brain infection called PML.

Cambridge, MA-based Biogen (NASDAQ: BIIB) fell 5.5 percent to $44.61 at 11 am Eastern time today, while Elan (NYSE: ELN) dropped 21 percent to $5.11. The European Medicines Agency said it has initiated the review to discuss any additional measures necessary to ensure the safety of natalizumab, according to a Reuters report.

The new report was bound to alarm some investors, because 23 cases of progressive multifocal encephalopathy, or PML, is significantly more than the tally of 13 cases the FDA counted last month. Cases of PML been adding up since the drug was re-introduced to the U.S. market in July 2006 after it was previously withdrawn because of the risk. Despite the chance of the infection, which the FDA pegged at about 1 in 1,000, patients have continued to seek out the treatment, which physicians say is the most effective therapy on the market for multiple sclerosis. (Natalizumab is also approved as a treatment for Crohn’s disease.) More than 46,200 people worldwide were taking the drug at the end of September, Biogen said earlier this week.

Biogen finance chief Paul Clancy told Dow Jones earlier this week that the company will discuss how to communicate the link between long-term use of the drug and increasing incidence of the dangerous side effect.

Regulators might choose to recommend that patients who take the drug for long periods of time take breaks, or “drug holidays,” said analyst Christopher Raymond of Robert W. Baird & Co., in a note to clients this morning. Since so many patients depend on the product to control their symptoms, it’s unlikely that regulators would force it off the market, he said.

“We deem it highly unlikely that either FDA or EMEA would pull Tysabri from the market,” Raymond said. “With PML risk well known, we think the most likely scenario would be additional labeling restrictions suggesting perhaps a drug holiday after an extended treatment period.”

[Updated comment from Biogen Idec.] There isn’t any data that suggests imposing a drug holiday would reduce the risk of patients getting PML, but there is data that shows symptoms of multiple sclerosis return quickly once patients quit taking natalizumab, says Biogen Idec spokeswoman Naomi Aoki. The company is talking with regulators about the best way to update the drug’s prescribing information to reflect the increased risk with extended usage, but even so, the incidence of PML still appears within the stated range of 1 in 1,000 patients, she says.

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Biogen Idec and Elan’s fast-growing multiple sclerosis drug, natalizumab (Tysabri), has been connected to 13 cases of a potentially fatal brain infection, according to an FDA notice reported on today by Bloomberg News.

Cases of progressive multifocal encephalopathy, or PML for short, have been adding up since the drug was re-introduced to the U.S. market in July 2006 after it was withdrawn because of the risk. Despite the chance of infection, which the FDA pegged at about 1 in 1,000, patients have continued to seek out the treatment, which physicians say is the most effective therapy on the market for multiple sclerosis. More than 40,000 people worldwide were taking the drug at the end of March, according to Cambridge, MA-based Biogen (NASDAQ: BIIB).

Behind the scenes, researchers have intensified efforts to find out what it is about natalizumab that might be making people vulnerable to this particularly dangerous brain infection, and how to treat it. One Harvard Medical School neurologist, Igor Koralnik, presented research last week at at a European medical meeting that suggested patients’ immune system T cells didn’t work as well against the virus linked to PML when they were on the MS treatment, according to a separate Bloomberg report. Biogen said the results weren’t definitive.

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Irish drugmaker Elan breached its multiple sclerosis drug partnership with Biogen Idec when it tried to cut a separate deal to collaborate with Johnson & Johnson, according to a federal judge.

Elan, which made the announcement last night, said it respects the decision of the U.S. District Court for the Southern District of New York. Elan didn’t say whether it plans to appeal the judge’s decision, although it said it is still committed to working with J&J to close that deal in a way that’s consistent with its partnership with Cambridge, MA-based Biogen Idec (NASDAQ: BIIB), which has operations in San Diego.

The heart of the dispute is about who owns and controls the most effective multiple sclerosis drug on the market, natalizumab (Tysabri), co-marketed by Elan and Biogen. Elan’s proposed agreement with J&J would have given J&J an option to acquire Biogen’s 50 percent stake in the multiple sclerosis treatment if some other company acquires Biogen. Since a takeover at Biogen is what billionaire investor Carl Icahn has been pushing for over the past two years, and he now has gained two seats on the company’s board, the odds of this happening have to look a little better now than when Elan and Biogen struck their original partnership. The stakes are high, as Biogen’s rights to Tysabri would factor into any buyout discussions, and Tysabri is Biogen’s fastest-growing product, generating $588.6 million in revenue a year ago.

Jennifer Neiman, a spokeswoman for Biogen Idec, said Biogen would have the right to end the partnership with Elan if Elan doesn’t change its deal with J&J, according to a report by the Associated Press. Elan didn’t immediately return the AP’s calls seeking comment.

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This week we had the usual mix of news on partnerships, clinical trials, and the like, as well as some fascinating in-depth discussions with key players in the life sciences arena.

—Antibiotic developer Rib-X Pharmaceuticals announced that the oral form its experimental antibiotic radezolid passed a mid-stage clinical trial as a treatment for a common form of pneumonia. The New Haven, CT, firm is looking to partner with a pharmaceutical company to help move the drug toward FDA approval.

—Genzyme (NASDAQ:GENZ) of Cambridge, MA, won approval from European regulators to market plerixafor (Mozobil) for patients with lymphoma and multiple myeloma who need stem cell transplants. The drug helps boost the number of stem cells that can be collected from the blood for such transplant procedures.

—Altus Pharmaceuticals (NASDAQ:ALTU) of Waltham, MA, said it will need to raise more capital before the end of next month in order to continue its operations. In March, the firm reduced its staff and abandoned development of a cystic fibrosis treatment in order to focus on ALTU-238, a treatment for patients with growth hormone deficiency.

—Cambridge-based Alnylam Pharmaceuticals (NASDAQ:ALNY) joined forces with Vancouver’s Tekmira Pharmaceuticals (TSX:TKM) to come up with new drug-delivery particles to get RNA-interference drugs where they need to go in the body. Alnylam will fund the research and gets exclusive rights to the resultant discoveries.

—Anti-viral drug maker Idenix Pharmaceuticals (NASDAQ:IDIX) priced a secondary public offering of 7.25 million shares at $3.14 each. The Cambridge-based firm expected to raise $21.2 million from the offer.

—Irish drug company Elan filed suit against its Cambridge-based partner, Biogen Idec (NASDAQ:BIIB), over Biogen’s objections to a deal with affiliates of health Johnson & Johnson (NYSE:JNJ) that Elan announced last month. That deal focuses on …Next Page »

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Relations appear to be increasingly strained between Biogen Idec (NASDAQ:BIIB) and the Irish drug company Elan, its partner for the distribution and development of the multiple sclerosis drug natalizumab (Tysabri). Elan said today that it has filed suit against Biogen over the Cambridge, MA-based biotech firm’s objections to Elan’s deal announced last month with affiliates of health products giant Johnson & Johnson (NYSE:JNJ).

Elan’s deal with Johnson & Johnson gives Elan the option to get financing from J&J to acquire Biogen’s rights to natalizumab if Biogen is acquired or undergoes some other change of control, according to Elan. And, according to Reuters, Elan’s $1.5 billion deal with J&J also gives J&J the option to purchase Biogen’s 50 percent stake in the Tysabri business if there’s a change in control at Biogen. Biogen has told Elan that Elan’s deal with J&J breaches the partnership agreement for the drug between Elan and Biogen. Elan disagrees. A Biogen spokeswoman wrote in an e-mail that the company has no comment about Elan’s recent legal action. The lawsuit Elan filed in federal court in New York seeks “declaratory and injunctive relief” that essentially confirms that Elan’s deal with J&J complies with its collaboration agreement with Biogen.

Biogen has been the subject of buyout rumors in recent years, and in late 2007 ended an official search for a buyer after the activist investor and Biogen shareholder Carl Icahn pushed for a sale of the company: Biogen said that December that it didn’t receive any qualified acquisition bids during the sales process. Biogen’s collaboration with Elan has factored into such buyout discussions, at least in part because of the importance of natalizumab to Biogen’s business. The drug, which generated $588.6 million in 2008 revenue for Biogen, is one of the company’s top three products, along with MS drug interferon beta-1a (Avonex) and rituximab (Rituxan) for rheumatoid arthritis and non-Hodgkin’s lymphoma. Biogen and Elan, which discovered natalizumab, entered their development and marketing agreement in 2000.

Elan issued a statement that said: “This is the same agreement we have been operating under for the last nine years. It is unfortunate that, because of Biogen Idec’s actions, Elan was left with no alternative but to seek court intervention to protect its interest.”

Biogen markets natalizumab for multiple sclerosis in the U.S. and Europe, and Elan has responsibility for selling the drug in the U.S. for the intestinal disorder Crohn’s disease. Biogen has said in previous financial reports that it has pinned much of its near-term revenue growth on increased sales of natalizumab.

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Cambridge, MA drug giant Biogen Idec (NASDAQ:BIIB) and Hawthorne, NY-based Acorda Therapeutics (NASDAQ:ACOR) announced today that Biogen Idec has acquired the rights to develop and commercialize Acorda’s multiple sclerosis drug, Fampridine-SR, in markets outside the U.S. Acorda will receive an upfront payment of $110 million and additional payments of up to $400 million, and retains commercialization rights to Fampridine-SR in U.S. markets. The deal increases the Cambridge company’s MS drug footprint, which already includes Biogen drugs Avonex and Tysabri. The latter drug has come under scrutiny recently for its link to a severe brain infection called progressive multifocal leukoencephalopathy, or PML.

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Biogen Idec (NASDAQ:BIIB) reported a tenth case of a serious brain infection in a patient taking Tysabri, the Cambridge, MA-based company’s drug for multiple sclerosis and Crohn’s disease. The news was disclosed late last Friday on the company’s website (pdf here). Luke wrote back in December about the history of Tysabri, which was pulled from the market in February 2005 after two cases of PML and returned to the market under a strict monitoring program in July 2006.

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Shareholders of Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) will have their say today on whether or not they want billionaire investor Carl Icahn’s nominees to shake things up in the boardroom.

The votes will be tallied at the company’s annual meeting being held at 9 am Eastern time today at the American Academy of Arts & Sciences in Cambridge. This election puts four of Biogen’s 13 director slots up for grabs, between nominees from Icahn and the company. Winners will get a three-year term.

This year’s proxy contest has been a rematch of sorts, after Icahn failed in his bid to gain seats on the board at last year’s election. This time around, Icahn delivered a much more hard-hitting case about the need for change, accusing the company of “failed leadership” and suggesting it ought to consider splitting in two to gain greater focus. Icahn cited a number of flaws he sees in the company’s current operation, including: Biogen’s rising expenses; botched marketing of its top multiple sclerosis drugs; inability to develop any new drugs since 2004; and a stock performance that has lagged its peers. This argument helped sway the most influential firm that advises investors on proxy elections—RiskMetrics Group—to recommend two of Icahn’s four nominees, Alex Denner and Richard Mulligan.

That was the biggest victory of the contest for Icahn so far, but Biogen has scored its points as well. The company’s slate of nominees won recommendations from the two other main proxy advisory firms—Glass Lewis & Co. and Proxy Governance. Biogen shot back quickly at Icahn’s ideas in its presentations to investors, disclosed with the SEC last month. It said that physicians are regaining confidence in its fastest-growing MS drug, natalizumab (Tysabri) after some safety scares last year, that its pipeline is full of promising drugs, and that splitting the company in two would actually raise expenses and make it more difficult to develop drugs with broad potential for both cancer and autoimmune diseases. Icahn’s ideas, the company said, “would destroy shareholder value.”

Dissidents in elections like these always are fighting an uphill battle, because many companies like Biogen stagger their election terms in a way that makes it impossible for a majority of directors to be voted out in a single election. But not many investors have the kind of bully pulpit or famous name recognition of Icahn, which enable him to tackle highly-skilled corporate PR head-on.

But it’s difficult even for Icahn, so he’s supporting a second proposal to make the company reincorporate in North Dakota instead of Delaware—partly because he helped craft new laws in North Dakota that make it easier for activists like himself to mount successful proxy fights, as described in this interesting Bloomberg News feature.

One thing that certainly helps dissidents in any proxy fight is shareholder resentment over the fact that a stock has been dragging down their portfolio.

On that score, Biogen would have to be considered favored to win heading into today. The company’s stock price closed yesterday at $52.32, down 14 percent from the same day a year ago. That’s nothing to write home about, but …Next Page »

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Biogen Idec delivered a second counterpunch today against Carl Icahn—this time against the billionaire investor’s proposal to split the company into two parts. The company said Icahn’s idea would add administrative costs, make Biogen less attractive to a potential buyer, and “destroy shareholder value.”

The Cambridge, MA-based biotech company (NASDAQ: BIIB) offered its latest salvo to shareholders in the escalating proxy war in a filing today with the Securities and Exchange Commission.

Icahn got the ball rolling earlier this week when he launched a scathing critique of virtually every important aspect of the company’s business, concluding that it suffers from “failed leadership.” He went so far in that filing to suggest that if his nominees are elected to the Biogen board at the annual shareholder meeting on June 3, they will study whether it’s a good idea to split the company into two entities. One would be focused on cancer drugs, and the other on neurology drugs—to see if that would improve management focus, Icahn said.

Biogen fired back yesterday, but only partially. The company challenged Icahn’s assertion that the R&D pipeline is weak, and offered data to suggest new momentum is building for sales of its multiple sclerosis drug, natalizumab (Tysabri). Today, Biogen offered a detailed response to the idea of the company breakup.

“Icahn’s proposal would destroy shareholder value on multiple fronts,” the company argued in the filing. A split would not make Biogen more attractive as an acquisition target of a larger drugmaker, it would create administrative redundancies, add costs, and eliminate opportunities for drugs that might work in both cancer and neurology, the company said. The smaller companies might also have a harder time borrowing money on favorable terms, the company said.

The real agenda, the company suggested, is that Icahn just wants to make a quick buck …Next Page »

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[[Update: information about a company financing was added to this story at 10 a.m today.]]

At some point in the life of a biotech startup, the firm typically needs to strike a deal with a drug company or another deep-pocketed outfit to stay in business. Avila Therapeutics is no exception, and the young Waltham, MA-based biotech startup hired Katrine Bosley, a veteran biotech dealmaker, to be its CEO.

Bosley is the first chief executive at Avila, which is developing drugs designed to form strong, covalent bonds with disease-related proteins. She joins the company as two of its potential drugs, one for resistant strains of hepatitis C virus and the other for immune system malignancies, advance toward initial clinical trials. Her experience in closing major deals for previous biotech employers figures to be key for Avila. In an interview last month, Avila vice president of business development and operations Nagesh Mahanthappa told me that the firm would likely seek a partnership to develop one of its two lead drug candidates.

Meantime, Avila has raised $5 million in a debt and options finacing, which could reach up to $20 million, according to an SEC record the firm filed yesterday. Bosley tells me that the debt financing comes from exisitng investors, and the investors have the option to convert the debt into equity stakes in the company. The funding will be used to continue the firm’s strategy, which includes entering its first drug into human clinical trials next year. The company previously raised $21 million in a Series A round of financing from Polaris Venture Partners, Atlas Venture, Abingworth Management, and Advent Venture Partners.

Bosley, a 15-year biotech industry veteran, started work at Avila this month. She was previously a vice president at Adnexus Therapeutics, where she played a key role in negotiations between the Waltham-based biotech firm and major drug company Bristol-Myers Squibb (NYSE:BMY), initially leading to the two companies’ alliance in early 2007 to co-develop Adnexus’s adnectin drugs for cancer. The deal worked out well enough for Bristol-Myers to begin an acquisition of Adnexus for more than $415 million in September 2007. She left Adnexus in late 2008.

Prior to joining Adnexus in 2004, Bosley spent eight years at biotech powerhouse Biogen Idec (NASDAQ:BIIB). There she was a part of a business development team that closed a deal that enabled Biogen to become the commercial partner with Irish drug firm Elan in 2000, for for the multiple sclerosis drug natalizumab (Tysabri), which is now Biogen’s fastest-growing product. Early in her career she was on the healthcare team at Lexington, MA, venture firm Highland Capital Partners and worked in the regulatory affairs department at Cambridge, MA-based biotech firm Alkermes (NASDAQ:ALKS).

Bosley’s arrival at Avila began in January when she literally bumped into Daniel Lynch, executive chairman of Avila, at The Westin St. Francis hotel in San Francisco, during the JP Morgan Healthcare Conference. She and Lynch struck up a conversation about the exciting science at Avila, she says, leading to a meeting with him several weeks later in Massachusetts. There are several familiar faces for her at the startup, including Avila founders and her former Biogen colleagues, Juswinder Singh and Roy Lobbs. Also, she is familiar with two of Avila’s venture backers, Polaris Venture Partners and Atlas Venture, both of which were investors in Adnexus.

“I’ve been kicking around the biotech industry for a few years now and you don’t run into something like this very often,” Bosley says. “It’s definitely a privilege to be part of a team like this.”

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Biogen Idec shot back at Carl Icahn today in a regulatory filing. The company disputed the ways in which the billionaire challenged virtually every aspect of its business, and disagreed with Icahn’s fundamental conclusion that it is suffering from “failed leadership.”

Cambridge, MA-based Biogen (NASDAQ: BIIB) says its R&D pipeline is strong, physicians are regaining confidence in the benefits of its most effective multiple sclerosis drug after some safety concerns, and that shareholders would “weaken” the board’s financial and operational capabilities if they vote for Icahn’s slate of candidates.

The proxy battle is heating up again this spring at Biogen, as Icahn launched a withering attack on the company as shareholders consider who to elect to the company’s board at the annual meeting on June 3. Icahn, who failed to win any board seats at last year’s meeting, is pushing again this time with a bid to elect four new directors to the 13-member board. Change in the boardroom is needed, Icahn argued, because the company’s stock price has trailed its peers for years, the predicted cost-savings from the 2003 merger with Idec Pharmaceuticals never materialized, and the company has failed to generate any new products from its R&D department since 2004.

“Fundamentally, we want to reinvigorate and refocus the R&D pipeline,” said Alex Denner, a portfolio manager for Icahn. “That’s one area they need critical help.” He added the Icahn slate wants to find ways to decrease spending on overhead, and that it wants to “study the idea” of whether the company would be better off splitting into separate companies that focus on cancer drugs and neurology treatments.

Biogen didn’t directly tackle that question of whether to split up the company, although it loaded plenty of details in its defense, through a 40-page PowerPoint presentation to shareholders that was disclosed with the Securities and Exchange Commission. Much of the defense was focused on the company’s pipeline of experimental drugs.

On the R&D question, Biogen argues that it has seen “robust growth across all phases of the pipeline.” The company had 73 programs in various stages from discovery through development, which represents 23 percent compound annual growth over the past five years. R&D spending has doubled in those years, while the number of programs has almost tripled, the company says. The company said it has 60 ongoing clinical trials, covering 15 different diseases. It quoted several bullish analysts after its March R&D day presentation. “The early stage pipeline is innovative,” said analyst Jason Kantor of RBC Capital Markets.

On its MS drug natalizumab (Tysabri), the company said “physicians are regaining confidence.” The company disclosed survey data from physicians who were asked …Next Page »

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Taligen Therapeutics, the Cambridge, MA-based developer of drugs for inflammatory diseases, has raised $26 million out of a $65 million financing round, according to a regulatory filing.

The investors in the company weren’t named in the document, although Nick Galakatos of Clarus Ventures, Ed Hurwitz of Alta Partners, and Timothy Mills of Sanderling Ventures are listed as directors. All three firms are listed on Taligen’s website as previous investors. CEO Abbie Celniker didn’t respond immediately to an e-mail request for comment.

Celniker held senior R&D posts at Genentech, Wyeth, Millennium Pharmaceuticals, and Novartis before she came to Taligen last summer. The company, as she explained to me in an interview last August, is developing drugs for inflammatory diseases that work in a new way, by controlling the “alternative complement pathway”-a part of the immune system that helps initiate and amplify inflammation. The approach is different than that of other protein drugs that work further “downstream” in the chain of inflammatory events, like Amgen’s arthritis drug etanercept (Enbrel) or Biogen Idec and Elan’s multiple sclerosis and Crohn’s disease treatment, natalizumab (Tysabri), she says. Intervening earlier in the complicated cascade of events, the reasoning goes, could better control inflammation.

Taligen was founded in 2004 by Woodruff Emlen and Michael Holers, professors at the University of Colorado. Taligen moved its corporate headquarters from Aurora, CO, to Cambridge last July when Celniker joined the company.

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Billionaire investor Carl Icahn made a relatively softball argument a year ago about why shareholders should throw out the management slate for the Biogen Idec (NASDAQ: BIIB) board and vote for his nominees instead. It didn’t work. This time, he’s launching a blistering attack that accuses the company of botching its 2003 merger with Idec Pharmaceuticals, and for having “failed leadership” that leaves it poorly positioned for the future.

Icahn made his case today in a 52-page PowerPoint presentation he’s delivering to shareholders, filed with the Securities and Exchange Commission. It’s a key part of the strategy for swaying stockholders to vote in favor of his four nominees to the 13-member Biogen board, before the votes are tallied at the company’s annual shareholder meeting on June 3. The company needs an overhaul, Icahn argues, so badly that his directors would consider splitting it into two operations—one of which concentrates on neurology, the other on cancer.

For starters, Icahn argues that the November 2003 merger of Biogen and Idec was a failure. It never generated the kind of rich returns shareholders have gotten from peer companies like Genentech, Gilead Sciences, and Celgene. The Biogen executives never delivered the cost savings advertised at the time of the Idec merger; in fact, operating expenses have shot up to be more than $711 million beyond the company’s target at the time of the union, Icahn said. As this played out over the years, CEO James Mullen was “paid well, despite poor performance and failures across many dimensions,” Icahn said. Part of the root problem, Icahn said, is that “management turnover makes consistent strategy and execution difficult.”

Last year, Icahn rolled out a relatively vague four-point plan for Biogen based mainly on boosting spending on R&D, improving employee morale, and mending relationships with partners. The goal, for a time, was to sell the company to a larger drugmaker. Last year, Icahn didn’t attempt to deliver a knockout blow like today’s proxy filing.

Not surprisingly, Biogen Idec wasn’t thrilled to answer the latest round of tougher charges.

“This appears to be nothing more than an 11th hour tactic by Mr. Icahn to win votes,” said Biogen spokeswoman Naomi Aoki. “Since last year’s shareholder vote, he’s made no suggestions on how to better run the business. I find it curious that he only makes suggestions on the eve of the shareholder vote, even though he’s had a year to make suggestions.”

Alex Denner, a portfolio manager for Icahn who is one of his nominees for a board seat at the upcoming annual meeting, couldn’t be reached for comment tonight.

But Icahn’s team has obviously spent a lot of time and research digging into every aspect of Biogen Idec’s business, and it heaps criticism in every major department.

On the commercial product side, Icahn singled out shortcomings in marketing of interferon beta (Avonex) for multiple sclerosis. That drug has lost the lead in U.S. market share to Teva Pharmaceuticals’ glatiramer acetate (Copaxone), which now has 37 percent of the market, compared to Avonex’s 28 percent. The Biogen product has lost 14 percentage points of market share since April 2005, Icahn said. Another Biogen drug for severe psoriasis, alefacept (Amevive), “never lived up to management hype.” That product generated just $12 million in sales in 2006 instead of the $500 million projected three years earlier, Icahn said. Then there are the sales projections for natalizumab (Tysabri), its fastest-growing product, which were “overly aggressive” Icahn said.

On business development, the company has also “done very little” to defend or build up strength …Next Page »

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Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) and its partner, Elan, catch a lot of heat because their fastest-growing drug for multiple sclerosis is associated with a rare, potentially fatal brain infection called PML. But today they are pushing back a bit with a study that suggests the drug may provide an important benefit to balance against the risk—the potential ability to help promote healing around the frayed nerves of MS patients.

The finding is preliminary, from a small study of 62 patients who took natalizumab (Tysabri), and 26 patients in a control group followed for a year, according to research presented today at the American Academy of Neurology annual meeting in Seattle. Researchers at the Jacobs Neurological Institute in Buffalo, NY, led by Robert Zivadinov, found that natalizumab promoted re-myelination and stabilized de-myelination in lesions and brain tissue that appeared normal.

If this can be proven in larger studies, it’s the sort of finding that could change the risk/benefit equation for the drug. More than 400,000 people in the U.S. suffer from multiple sclerosis, a disease in which the immune system goes haywire and starts attacking the fatty coating around nerve fibers, called myelin. Existing MS drugs mostly work by tamping down the excess inflammation that that harms the myelin coating, but they don’t really stop the short-circuiting of nerve signals that gradually robs people of their balance, and ability to walk. Scientists have not observed that older drugs work well enough to allow myelin to naturally regenerate, but that’s one possibility for what was happening with patients in this study on natalizumab, says Al Sandrock, Biogen’s senior vice president for neurology R&D.

“It’s hard to be absolutely sure you have re-myelination going on,” Sandrock says. “Perhaps by decreasing inflammation you allow normal healing processes to take place.”

The study, sponsored by Biogen Idec, used an imaging technique known as magnetization transfer ratio (MTR). Generally, if researchers see an increase in MTR signal, that suggests the nerves may be re-myelinating, and a decreasing signal is associated with losing myelin, Sandrock says.

“What we have seen in these MRI data suggest that Tysabri may have the capacity to repair and possibly restore some of the damaged myelin sheath that protects nerve fibers. Results from this study support the continued investigation of the potential effects of Tysabri on this process,” Zivadinov said in a Biogen statement.

The finding is intriguing, but would need to be confirmed in subsequent studies, Sandrock says. Other imaging techniques may be more specific for spotting re-myelination, and even then, “the resolution is not where I’d like it,” Sandrock says.

Still, Biogen has to be hoping this could shift the focus away from PML fears, and perhaps revive the slowing growth rate of Tysabri sales. The drug generated $227 million in worldwide first quarter sales, a long shot from the $246 million that Wall Street analysts had been expecting.

Whether this can help revive Tysabri in the near-term or not, seeking ways to regenerate myelin for MS patients are clearly on Biogen’s research agenda. The company plans to move the first drug specifically designed to induce re-myelination into clinical trials later this year, a program I profiled back in August. Biogen hopes to bring that drug into human trials in late 2009 or early 2010, Sandrock says. He didn’t cite any new natalizumab trials that the company has planned to test the idea that it is able to spur re-myelination.

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Biogen Idec is the world’s largest maker of multiple sclerosis drugs, and to keep it that way, the company needs to stay on the good side of neurologists. So when a large number of these docs get together for a scientific meeting, it’s time to start wooing.

This is at the top of Biogen’s agenda for the week ahead, as the American Academy of Neurology, the nation’s biggest group of doctors who treat multiple sclerosis, Alzheimer’s, Parkinson’s and other neurodegenerative diseases, is holding its annual meeting April 26 through May 1 in Seattle.

So before the wining and dining begins, I lined up an interview with Al Sandrock, Biogen’s senior vice president of neurology R&D, to talk about the key points the company will try to make to doctors. The company heads into this meeting with weakening demand, as natalizumab (Tysabri) produced $227 million in first-quarter sales, quite a bit short of Wall Street’s expectations of $246 million.

Biogen plans to keep natalizumab on center stage at the meeting. After all, it’s regarded by many as the most effective MS drug on the market, although it also carries the risk of subjecting patients to PML, a potentially fatal brain infection. On the other hand, Biogen also has plenty to say about another drug, an experimental version of its best-selling MS drug, interferon-beta (Avonex), that’s supposed to require fewer shots, and reduce flu-like side effects. The company also is preparing the first clinical trial of a drug designed to regenerate the myelin coating around nerves, which gets damaged by MS.

“Physicians and patients will be thrilled to see how large the MS pipeline is and how far we’ve come in the past 10 years,” Sandrock says.

Biogen’s head of drug safety, Carmen Bozic, is expected to give an overview of the risk/benefit balance for natalizumab. The drug’s prescribing information has stated that patients run a 1 in 1,000 risk of getting PML, ever since the drug was re-introduced to the market in July 2006. But Bozic’s presentation will point out that after almost three years on the market, there are now more than 40,000 patients taking the product, and there have been six confirmed cases of PML, Sandrock says. Five of the six patients diagnosed with PML since the drug returned to the market are still alive, said spokeswoman Shannon Altimari.

“When the drug was approved, it was said the risk of PML was 1 in 1,000, and it was fatal,” Sandrock says. “Now we can see the risk is likely less than 1 in 1,000, and PML is a more manageable than we thought. We think physicians will draw some comfort from that.”

The company will also show data from a Phase I trial of its pegylated interferon-beta1a. This is the drug that Biogen is counting on will extend the life …Next Page »

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Biogen Idec’s fortunes rise and fall on largely on the performance of sales of natalizumab (Tysabri), and the latest Tysabri sales trends are disappointing investors.

Biogen, which has headquarters in Cambridge, MA, and significant operations in San Diego, said today that the multiple sclerosis drug generated $227 million in worldwide sales during the first quarter. That might sound good, since it’s a 44 percent increase over a year ago, but it’s quite a bit short of the $246 million average sales estimate that Wall Street analysts had predicted.

Even though Biogen and its marketing partner, Elan, have started playing up the advantage Tysabri has in effectiveness over other MS medications, the rate of growth in new prescriptions isn’t fast enough, said Christopher Raymond, an analyst with Robert W. Baird & Co., in a note to clients earlier this week. The drug is now being taken by about 40,000 patients worldwide, about 3,000 more than the previous tally three months earlier.

“Patient trends remain concerning,” Raymond said in his report.

Biogen reaffirmed in its financial report that it can make up for this, and still hit its goal of generating a profit of $4 a share this year. But how this drug performs in the market, and whether a fast growth rate can outweigh the ever-present risk of patients getting rare, but often lethal brain infections, remains on top of investors’ minds. It could also go a long way toward determining whether the incumbent Biogen directors maintain a firm grip on the company, or whether billionaire investor Carl Icahn will get his way and take over four of the 13 board seats when those seats come up for election at the next Biogen board meeting, which is still unscheduled but expected to take place in the next several months.

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Cambridge, MA-based biotech firm Biogen Idec (NASDAQ:BIIB) says that the FDA has approved a high-yield process for making multiple sclerosis drug natalizumab (Tysabri). This process for making natalizumab, an antibody drug that Biogen co-markets with Irish drug company Elan, was also approved by the European Medicines Agency in December 2008. Biogen plans to use the process to make natalizumab at its plant in Research Triangle Park, N.C.

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It’s rematch time in the battle for control of Biogen Idec. With the Cambridge, MA-based company’s annual shareholder meeting likely coming sometime in the next couple months, the incumbent board nominees are being challenged by four rivals put forth by billionaire activist investor Carl Icahn. A media leak has fueled speculation of a potential buyout to raise the stakes, and hedge funds have been fanning the rumor flames as they place leveraged bets in the options market.

Facts often get shoved aside by opinions and assertions in brawls like these. But there are some key data points that will emerge Thursday afternoon that could influence whether Biogen wins the way it did last year, or whether billionaire investor Carl Icahn gets the multi-billion dollar takeover he desires. Thursday is an important day because Biogen plans to report its first-quarter earnings after markets close for the day. The results will include an important tally of the number of patients taking its drug for multiple sclerosis, natalizumab (Tysabri).

Tysabri is generally considered by physicians to be the most effective drug against MS, although it has to be given under a strict patient monitoring program for signs of a potentially deadly brain infection called PML. When Icahn first built a stake in Biogen in 2007 and started urging for a sale to a larger drugmaker, Tysabri was gaining momentum after it had a little more than a year in the marketplace. But since then, several new cases of PML have been diagnosed in patients, and growth projections have slowed. About 37,100 patients were taking the drug worldwide when Biogen reported figures at the end of December. When Biogen releases Tysabri’s first-quarter sales Thursday, along with the updated number of patients on Tysabri, it may indicate how demand has slowed, and whether the potential upside is worth the risk to an acquirer.

Partly because of the slowing growth trend for Tysabri, and fierce new competition expected from Novartis and Merck KGaA, which are developing oral MS drugs, at least one analyst is skeptical that this is the time for Biogen to dress up for a sale. So even though the Financial Times reported in February that Sanofi-Aventis may want to buy Biogen, which triggered renewed activity among options traders last week, analyst Christopher Raymond of Robert W. Baird says he still wouldn’t bet on it. He lowered his Tysabri sales forecast for 2009 to $1.11 billion, from $1.15 billion.

“Given Tysabri trends and Avonex-arguably growing mainly through price increases, we don’t see the logic, and wouldn’t bite,” on rumors that the company is a takeover target, Raymond wrote in a note to clients yesterday.

Still, the games have already begun. As we reported back in February, Icahn has nominated …Next Page »

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