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Ebb & Flow

Biogen Idec (BIIB) was off last week on slowing sales of Avonex interferon beta-1a, eroding $3.50 to $76.72 for the week. On the company's conference call, President and CEO James Mullen said 3Q07 sales of the multiple sclerosis drug were a "major disappointment."

The company didn't officially chalk up the shortfall to its competitive MS product Tysabri natalizumab, but it did warn that Tysabri could play a role in the future of the Avonex franchise.

Avonex sales were $455 million in 3Q07, a sequential decline of 1.5% from $462 million in 2Q07. Still, sales were up 2.2% over 3Q06, which EVP and CFO Paul Clancy noted had been "a very strong quarter" for the drug.

Sequentially compared to 2Q07, both U.S. and international Avonex sales were off last quarter by 1.2% to $266.4 million and 1.8% to $188.5 million, respectively. But the year-over-year numbers revealed a marked diversion between the markets, as U.S. sales were down by 0.7%, while international sales gained 6.6%.

In its SEC filing, BIIB attributed this shrinkage to "decreased product demand resulting in lower volume." The company went on to note that lower volume was largely offset by a price increase in August 2007.

BIIB also cautioned that Avonex faces increasing competition with new and existing MS treatments, including its own Tysabri. Sales of the drug, which is partnered with Elan (ELN), were $93 million in 3Q07, up from $72 million in 2Q07 and $8 million in 3Q06. BIIB posted $63 million in 3Q07 revenues for Tysabri, which the partners re-launched in July 2006.

Market makeover

"We are beginning to see the impact of Tysabri on the ABCR market in the U.S., which is now flat to declining on a year-over-year basis," BIIB's VP of Pharmaceutical Operations and Technology Robert Hamm said on the call.

ABCR refers to the market for MS treatments Avonex; Betaseron interferon beta-1b from Bayer (FSE:BAY; BAY) and Novartis (NVS; SWX:NOVN); Copaxone glatiramer acetate from Teva (TEVA); and Rebif interferon beta-1a from Merck (FSE:MRK) and Pfizer (PFE).

Four out of five patients prescribed Tysabri are new to BIIB's MS franchise, Hamm said. He also noted that one-third of Tysabri patients had quit a previous treatment or were treatment naïve.

According to Hamm, patients on Copaxone, which requires daily injections, comprise the single largest source of Tysabri patients in the U.S. TEVA reports its

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