Speculation Heats Up on Biogen as an Acquisition Target or Starting a Buying Spree

Speculation Heats Up on Biogen as an Acquisition Target or Starting a Buying Spree July 25, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Now that Cambridge, Massachusetts-based Biogen ’s chief executive officer, George Scangos, is leaving the company, speculation on whether the company will be an acquisition target—or go on a buying spree—has heated up.

Most investors argue that Biogen needs to do something to bolster its volatile stock value and shore up sagging sales of its lead multiple sclerosis franchises. Back in October 2015, the company announced restructuring, slashing 11 percent of its workforce and a number of programs. It laid off about 880 people in order to save about $250 million in operating costs. Program cuts included its Phase III program for Tecfidera in secondary progressive multiple sclerosis (MS), it’s anti-TWEAK program in lupus nephritis, and other programs in immunology and fibrosis research.

The company also doubled-down on neuroscience indications, making a strategic pivot toward Alzheimer’s disease. It also focused on opicinumab (anti-LINGO-1), an investigational, fully human monoclonal antibody that was hoped to actually repair the nerve damage caused by MS. Unfortunately, the drug failed its Phase II clinical trial in June.

A lot of the company’s future value, and part of what makes it a dicey proposition as an acquisition target, is the company’s aducanumab, for Alzheimer’s. In clinical trials, the drug demonstrated a statistically significant improvement in two measures of cognition over placebo. As a result, the drug was streamlined past Phase II trials and directly into a Phase III clinical trial. Data is expected late this year.

But when the anti-LINGO-1 trial died, the stock dropped with it, losing $8 billion in market value in a single day. Investors would like Biogen to buy some companies to give the company some growth in the near-future. At the same time, there’s speculation that Biogen would make a good target.

Brian Skorney, an analyst with Robert W. Baird & Co. told TheStreet that Roche is a possible buyer of Biogen, but concerns over aducanumab could give buyers second thoughts. Alzheimer’s research is a wasteland of failed late-stage clinical trials with well over 123 on the junk pile. If aducanumab shows efficacy and is approved, on the other hand, it could bring in billions.

And apparently concerns over the company’s pipeline has pushed TheStreet’s Jim Cramer, who is also the portfolio manager of the Action Alerts PLUS Charitable Trust, to, according to TheStreet, “close out the portfolio’s position in the stock.”

However, Biogen’s position in MS is still hard to beat, even though it appears to be slowing down. Aside from Roche, other possible buyers include Pfizer , Sanofi and Allergan .

Biogen appears interested in acquisitions, and Scangos in last week’s conference call said the company was looking “at deals at all stages of development. We are in a number of discussions now.” Those deals are primarily in the neurology sector.

Potential targets include Neurocrine Biosciences , which has valbenazine in clinical trials for tardive dyskinesia and schizophrenia, schizoaffective disorder, and mood disorders such as bipolar disorders or major depressive disorder.

Other possible targets are Acadia Pharmaceuticals , Sage Therapeutics and Synergy Pharmaceuticals. Acadia’s Nuplazid (pimavanserin) went on sale on May 31 to treat hallucinations and delusions associated with Parkinson’s disease psychosis. Sage announced positive topline results on July 12 for its Phase II trial of SAGE-547 in severe postpartum depression, and Synergy’s plecanatide is progressing through a trial for irritable bowel syndrome with constipation (IBS-C).

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