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Biogen's Costs Lead to 27% Drop in Profit

The drug firm misses analysts' third-quarter forecasts, citing merger and job-cut expenses.

October 27, 2005|From Associated Press

BOSTON — Biogen Idec Inc. on Wednesday said its third-quarter profit fell 27% on merger costs and severance expenses from job cuts. The result fell short of Wall Street's expectations, sending the company's shares down nearly 4% in after-hours trading.

The Cambridge, Mass.-based biotechnology company reported net income for the July-September period of $27.2 million, or 8 cents a share, compared with a profit of $36.8 million, or 10 cents, a year earlier. Revenue grew 10% to $596 million from $543 million, driven by 8% sales growth for Biogen's multiple sclerosis drug Avonex.

The company, which is trying to recover after withdrawing a newer multiple sclerosis drug in February amid safety concerns, reported a 14% increase in revenue from Rituxan, a cancer drug that Biogen co-promotes with Genentech Inc.

The performance was clouded by several one-time expenses, including $88 million in merger-related costs, $27 million in severance and relocation expenses tied to job cuts and $21 million from the sale of a manufacturing plant.

Biogen said last month that it would cut 650 jobs in a plan to reduce annual expenses by $200 million to $300 million.

Excluding charges in the quarter, Biogen's profit totaled $122 million, or 36 cents a share. On that basis, analysts surveyed by Thomson Financial had expected 42 cents.

Biogen said it expected a full-year profit in 2006 of $1.95 to $2.10 a share, not counting the effects of stock-option expenses. Analysts expect a profit of $1.99.

Biogen shares plunged more than 42% on Feb. 28, the day Biogen and its Irish partner, Elan Corp., withdrew the multiple sclerosis treatment Tysabri and disclosed that the drug might heighten the risk of contracting a rare and often fatal disease of the central nervous system. The shares fell 41 cents Wednesday to $40.01.

The companies recently finished a Tysabri safety review and applied a month ago to resume sales in the United States with a revised label and a plan to address patient risks.

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