Biotech/Pharma Roundup
Potential Tysabri Return Lifts Biogen
Peter Kang, 08.15.05, 7:00 AM ET

The American Stock Exchange Pharmaceutical Index (DRG) ended flat for the second consecutive week; the Nasdaq Biotechnology Index (NBI) posted a weekly decline of 1%.

Shares of Biogen Idec (nasdaq: BIIB - news - people ) and Elan (nyse: ELN - news - people ) surged on Tuesday after the companies said they completed part of a safety review for multiple sclerosis drug Tysabri, which was pulled from the market last February. Elan gained 13% in Tuesday's session but gave back the bulk of the gains later in the week. Biogen Idec rose to a weekly gain of about 9% (see: "Tysabri Is No Blockbuster"). Bear Stearns maintained an "underperform" rating on shares of Biogen Idec and said a Tysabri return would be worth about $4 to $5 per share. "Assuming that Tysabri can return to market by 2007 and hit sales of $400 million by 2008, we believe this is worth about $4/share assuming a seven times revenue multiple and 25% discount rate," it said. "While the stock could trade up in the near term on speculation of Tysabri's return, we believe slowing U.S. sales of Avonex, newer therapies in development for MS, potential competition to Avonex in the EU and reduced economics on Rituxan give us some concern over the longer term."