Serono - down to $11 billion?

Poor Serono said today its sales in the last three months of 2005 were flat for the second quarter in a row at $605 million, as growth slowed for its multiple sclerosis product Rebif and sales of its fertility treatment Gonal F continued to shrink.

For the full-year, product sales rose 7.4% to $2.3 billion, while Serono posted a full-year loss of $106.1 million or $7.28 per share, hurt by a $725 million provision to settle a fraud case in the USA. Fourth-quarter net income rose 72% to $144.1 million or $9.80 a share, lower than expected by analysts.

The Swiss biotechnology company, which put itself up for sale last year but has yet to find a buyer, said top-selling product Rebif (interferon beta-1a) grew 8% in the fourth quarter to $335 million. The product assumed even more importance for Serono Gonal F (follitropin alfa) declined 12% to $134 million on pricing pressure from arch-rival Organon. Rebif accounted for nearly 56% of Serono's total product sales in the period, up from 51% a year ago, as Gonal F fell back 3 points to 22%. The shift comes at a time when Serono has been trying to reduce its reliance on Rebif, a process held back by two pipeline disappointments in 2005, when two Phase III projects - onercept for psoriasis and Canvaxin for melanoma - hit the buffers. And Rebif could see increased competition later this year if Biogen Idec and Elan's withdrawn MS drug Tysabri (natalizumab) returns to the market.

Raptiva (efalizumab), Serono's new drug for psoriasis, helped offset as sales more than doubled to $12 million in the quarter, but the fall-off in sales accelerated for two of Serono's other products, Serostim (somatropin) for wasting and Novantrone (mitoxantrone) for MS and cancer, both of which slumped by a quarter to $17 million and $18 million, respectively.

Serono had nothing to add on the progress of its search for a buyer, other than reiterating that it had hired Goldman Sachs to help it consider its strategic options, and that there is 'no assurance that any transaction will be consummated'. GlaxoSmithKline is reported to be in discussions with Serono, but earlier rumours that Novartis was considering a bid for the firm came to nothing.

Reports in the UK Sunday Times suggest that GSK might bid $11 billion, down a further $1 billion from previous "estimated valuations".

Source: Pharma Times