NEW YORK (AP) -- Shares of Biogen Idec Inc. rose Friday after a Citi Investment Research analyst upgraded the stock, saying he expects Biogen to take a commanding share of the market for multiple sclerosis drugs.
THE SPARK: Analyst Yaron Werber lifted his rating to “Buy” from “Neutral” and increased his price target to $187 per share from $160. Werber said Biogen's drug Tysabri is an important option for patients who have severe multiple sclerosis, while its pill Tecfidera could be approved by the end of March. The drug is expected to become a major seller if it gains approval. Werber added that Biogen is developing a new version of Avonex, an older therapy, which could reach the market in 2014.
“We expect that Biogen will come to dominate the MS market in the same way that Gilead (Sciences Inc.) dominates HIV and this should lead to tremendous operating synergy and margin expansion,” he wrote. He said the company's income and sales show grow consistently and should surpass Wall Street's current estimates.
THE BIG PICTURE: Biogen has marketed Tysabri with Elan Corp. PLC since 2000, but on Wednesday, Biogen agreed to buy full ownership of the drug from Elan. The Weston, Mass., company will pay Elan $3.25 billion upfront, and royalties on future sales of the drug.
In 2012, Biogen said sales of Tysabri sales rose 5 percent to $1.14 billion and Avonex sales rose 8 percent to $2.91 billion.
In clinical trials, Biogen said patients who took Tecfidera were far less likely to have a relapse in symptoms than patients who took a placebo. The drug also worked better than Copaxone, an injection that is the current leading treatment for multiple sclerosis. The Food and Drug Administration is scheduled to make a decision on Tecfidera by late March.
Werber says Biogen is expecting about $250 million in sales of Tecfidera in 2013. He expects those sales to grow to $909 million in 2014, its first full year on the U.S. market, and $4.26 billion by 2020
SHARE ACTION: Biogen Idec shares gained $4.97, or 3.1 percent, to $165.27 in midday trading. The company's stock rose 33 percent in 2012 and has been trading at all-time highs in recent weeks. The shares peaked at $167.35 Wednesday.