By Victoria Griffith
Biogen chief executive Jim Mullen knows what it's like to be faced with an empty pipeline. In October 1999, he was back in Boston after a stint with the company in Paris when Biogen revived some devastating news.
Trials of the promising drug Antova - aimed at treating diabetes and multiple sclerosis - had to be halted because some patients were suffering from life-threatening blood clots.
"Three days after I got off the plane, our pipeline started to blow up," says Mr Mullen. It was a turning point for the company. "We didn't exactly have 20 things [in development]. We had been under-invested in research."
Mr Mullen, who became chief executive nine months later, decided Biogen needed to invest in drugs.
Sceptics have long accused the company of being a one-trick pony, overly dependent on its now-fading multiple sclerosis franchise. Over the next few months, the company will face the ultimate test as it rolls out its psoriasis treatment Amevive.
"We're putting 33 per cent of our revenues back into research and development now," says Mr Mullen. This compares with an average of 18 per cent for the rest of the industry. "Some of our investors would prefer that we show more of that cash on our bottom line, but my job is to make sure Biogen is still around in 10 years."
If Amevive performs well, investors might begin to believe in Biogen's long-term staying power. Demand for the drug, which started shipping in February, is reportedly strong, although many potential customers are waiting to sort out reimbursement issues.
But the success of Amevive is by no means guaranteed. Earlier this year, European regulators rejected the drug, eliminating up to one-third of the product's expected market. Competition will also be tough.
Genentech's Raptiva and Johnson & Johnson's Remicade are expected to gain approval, this year or next. And Amgen's Enbrel, already a best-selling arthritis drug, and now awaiting clearance for psoriasis, is likely to prove a formidable rival.
"We think Enbrel will become the lead psoriasis medication because it has the best safety and effectiveness profile," says Eric Schmidt, biotechnology analyst with SG Cowen. "But Amevive will be a strong contender because of its first-to-market status."
Biogen became an early biotech star when it received approval for its multiple sclerosis product seven years ago. With little competition, Avonex quickly became a best-selling drug.
Because of Avonex's success, investors expected Biogen to join fellow biotech groups Genentech and Amgen in becoming the titans of the industry.
It did not happen. While Biogen, which has more than $1.1bn in annual revenues, is still one of just 19 biotech companies to turn a profit, the group is dwarfed by West Coast rivals Amgen and Genentech. Amgen's 2002 sales reached $5bn, Genentech's $2.7bn.
Profits from Avonex will not continue forever. However, Biogen now has other cards up its sleeve. Amevive will begin to add to the bottom line this year. And the company is looking a little further down the road to another potentially important product. Antegrin, a treatment for Crohn's disease and multiple sclerosis, may receive initial approval from the FDA (news - web sites) next year.