Washington Editor

Biogen Inc. reached an agreement with Celltech Group plc to collaborate on development and marketing of Celltech’s humanized anti-TNF-alpha antibody product, CDP 571, currently in Phase III trials for Crohn’s disease.

While the companies will share research and development costs as well as profits henceforth, Cambridge, Mass.-based Biogen said, upon launch, that CDP 571 will be manufactured at its production facility, located in Research Triangle Park, N.C.

The news was released Wednesday around the same time that Biogen announced that its first-quarter earnings were unchanged from a year ago, due to increased costs associated with marketing Avonex, a multiple sclerosis drug.

Biogen reported net income of $72 million, or 47 cents per share, for the quarter ended March 31. The income is in line with the analyst consensus estimates.

Worldwide sales of Biogen’s only product, Avonex, were $266 million in the first quarter, an increase of 21 percent over the same period last year. U.S. sales of the product were $197 million, an increase of 22 percent. Biogen now forecasts next year’s earnings per share to be from $1.70 to $1.78. Included in the forecast is the cost of the CDP 571 collaboration, which is expected to reduce operating earnings per share an estimated 10 cents to 14 cents in 2002, the company said in a prepared statement.

Biogen’s stock (NASDAQ:BGEN) closed Wednesday at $42.90, up $1.36.

Meanwhile, Biogen wouldn’t discuss detailed financial terms of its agreement with Celltech, but Peter Kellogg, Biogen’s executive vice president and chief financial officer, told BioWorld Today that the deal is fundamentally a 50-50 profit share.

“We’ll manufacture and sell the product, and they will participate as well with their own sales organization,” he said. “At the end of each quarter, we’ll go down and figure out what the profit was, and share it 50-50 [worldwide].”

Biogen did not pay up-front fees, but will pay milestones, described by Kellogg as being “very, very small.” He added that the high cost of the deal to Biogen is associated with the technology transfer to North Carolina.

“This is a major commitment it is actually a multimillion dollar commitment over the next year or so, and we have agreed to pay it ourselves,” he said.

Turning over manufacturing responsibilities to Biogen provides Celltech, of Slough, UK, with lower supply costs, plus Kellogg said Biogen can “easily” supply the worldwide market out of its North Carolina plant.

The Phase III trial of CDP 571, an orphan drug with fast-track status, will be completed during the second quarter and data are expected to be available later this summer. Once the Crohn’s study is complete, Kellogg said Biogen intends to commence a study of CDP 571 in psoriasis.

Biogen is no stranger to drug studies involving Crohn’s disease or psoriasis. Along with its partner, Elan Corp. plc, of Dublin, Ireland, Biogen is sponsoring Phase III trials of Antegren (natalizumab) in Crohn’s disease as well as multiple sclerosis. (See BioWorld Today, Dec. 20, 2001.)

Additionally, Biogen will head to Maryland next month to present its case to an FDA advisory committee for marketing approval of Amevive, a psoriasis drug.

Kellogg said this is all part of the Biogen strategy.

“We think it will be very advantageous to have multiple offerings in these diseases, whether it is Crohn’s, multiple sclerosis or psoriasis,” he said. “We think the patients with these diseases will not respond to any one drug necessarily. After all, the drugs are not really a cure, they are an improvement and we think it is going to be very advantageous to build a commercial organization that has multiple products in therapeutic areas.”

CDP 571 is the subject of two Phase III studies, the first of which involves 273 steroid-dependent patients. The 35-week study will look at the ability of CDP 571 to enable safe withdrawal of steroids from patients while maintaining disease remission. The second study, involving 397 patients, will assess CDP 571’s ability to maintain disease remission through 28 weeks.