Sunday, May 11

Biogen's Tysabri Disclosure Policies Raise Questions

NEW YORK (Dow Jones)--Biogen Idec Inc.'s (BIIB) refusal to disclose new cases of a severe brain infection among multiple-sclerosis patients taking its Tysabri drug has raised questions about its disclosure policies.

The Cambridge, Mass., biotech company believes those developments aren't material news because the risk profile for developing progressive multifocal leukoencephalopathy, or PML, is well defined, and providing such information isn't beneficial for patients, physicians or investors unless that profile changes. As the company notes, the drug's label implies a risk rate of one in every thousand patients.

However, knowing the risk rate didn't prevent Biogen shares Friday from dropping more than 7% and shares of Elan Plc (ELN) ??? the drug's co-marketer ??? from falling almost 18% when the number of confirmed PML cases since its 2006 relaunch jumped to 23 from 13.

Some investors and analysts argue that Tysabri's significant role as the key growth driver for the companies makes any such developments vital in making a decision in investing in either company, and should be disclosed accordingly.

"It is hard to understand how they wouldn't have deemed it necessary to communicate such material information as soon as it was available to them," Geoffrey Porges, analyst with Sanford Bernstein, said. "I think the company will have to revisit its disclosure policies in light of this."

News of the sharp increase in PML cases didn't come from Biogen or Elan, neither of which have commented on the figure, but rather from U.S. and European regulators.

Although the companies consult with each other, Biogen takes the lead on releasing information on Tysabri related to MS. Elan's stock is more sensitive to related news because the drug is its biggest seller.

Biogen was keeping Wall Street updated on new cases until July, the third anniversary of Tysabri's relaunch, when it believed the risk profile would be clearer. It hasn't provided any information since that time.

"We are confident we are in full compliance with all disclosure requirements," Biogen spokeswoman Naomi Aoki said.

While the company contends that the PML-related information doesn't help physicians or patients, Morgan Stanley analyst Steven Harr notes that Biogen's decision to stop reporting cases, just as evidence of accelerating risk was developing, may in fact cause increased concern.............

Aoki said the company uses "statistically acceptable measurement of risk" that incorporates the number of patients exposed along with their duration of use.

On a conference call last week, Biogen executives defended the rate, which "even in that third year beyond 24 months, is within the currently implied risk in the label" ......full story in The Wall Street Journal