Biogen's earnings dampen optimism

Biogen Idec Inc. chief executive James C. Mullen says the Cambridge company's search for a buyer has been "unsettling" for employees and shareholders.

In a conference call with analysts yesterday to discuss third-quarter financial results, Mullen said Biogen Idec decided to disclose on Oct. 12 that the company was for sale so it could openly seek potential bidders while also addressing the concerns of workers and shareholders about the ramifications of a deal.

"I felt we had a need to be able to talk as directly as possible to both the shareholders as well as the employees about what was going on," Mullen said. He added that the company hopes "to keep this process as short as humanly possible because, as you can appreciate, going through a period like this creates a lot of uncertainties in the company among employees."

For the third quarter, Biogen Idec's net income dipped 24 percent to $119.4 million, or 41 cents per share, compared with $156.6 million, or 45 cents per share, for the same quarter last year. That disappointed Wall Street analysts who had predicted better earnings on stronger sales. Revenue climbed to $789.2 million, 12 percent more than the $703.9 million it generated in the same quarter a year ago, but lower than the $803.65 million that was the consensus forecast by analysts, according to Thomson Financial.

Biogen Idec shares fell 1.47 percent to $78.93 yesterday. Since the potential sale was made public, shares are up about 13 percent.

But some analysts doubt the company will fetch as much as its current share price suggests. It is likely to push for a deal before it reports fourth quarter earnings, given disappointing sales of Avonex, a multiple sclerosis treatment that is one of its most important products, wrote George Farmer, senior biotechnology equity analyst at Wachovia Capital Markets.

Mullen stressed during the conference call that it could take months for a deal to play out and that there was no guarantee a sale would take place. He added, however, that he is optimistic about the company's future even if it doesn't find a suitable buyer.

"Both management and the board are confident that the business outlook for Biogen Idec as a stand-alone company will result in an attractive value for shareholders," he said.

Mullen declined to respond to a question about the company's talks with billionaire investor Carl Icahn, who has expressed interest in buying Biogen Idec.

Likely suitors include major drug companies such as Pfizer Inc., Sanofi-Aventis Group, Johnson & Johnson, and Novartis AG.

Biogen Idec, the state's largest biotech company, has a market value of about $23 billion. It has 4,000 employees worldwide, including 1,750 in Massachusetts.

Keith Reed can be reached at reed@globe.com.