Takeover Target or Potential Buyer? Analysts Speculate on Biogen’s Future After Big Stock Drop

Takeover Target or Potential Buyer? Analysts Speculate on Biogen’s Future After Big Stock Drop
July 28, 2015
By Mark Terry, BioSpace.com Breaking News Staff

Analysts continue to speculate on whether Cambridge, Mass.-based Biogen may be a takeover target after the company reported a disappointing second quarter and lowered its full-year guidance.

To be fair, Biogen’s second-quarter earnings report was not that clear cut. The company reported revenues of $2.6 billion, an increase of 7 percent compared to the second quarter of 2014. The company’s six-month earnings were $5.2 billion, up from $4.6 billion in 2014.

The company’s biggest products are therapies for multiple sclerosis (MS), which is where some of the issues originated. Overall, MS product sales increased from $2.0 billion in the second quarter of 2014 to $2.1 billion this year. Tecfidera rose from $700 million in the second quarter of 2014 to $883 million this year. At least part of the issue is analysts were expecting quarterly sales of $909 million instead of $883 million for Tecfidera.

However, sales of interferon products, Avonex and Plegridy, dropped from $774 million last year to $690 million in the second quarter of this year. Tysabri dropped from $533 million in last year’s second quarter to $463 million this year.

Tecfidera, Avonex and Tysabri account for 81 percent of Biogen’s revenue in 2014.

The company also modified its annual guidance, decreasing its expected revenue growth to 6 to 7 percent for 2014, and earnings per share to be between $14.25 and $14.70, also a decrease. The prior guidance had sales growth at 14 to 16 percent with EPS of $16.60 to $17.

However, Biogen has a cash stockpile of $4.5 billion. Analysts point out that the company could use that cash to buy another company or to repurchase stock.

Some analysts speculate that Biogen might pick up a company, which might help fend off any potential acquisitions. Isis Pharmaceuticals (ISIS) is one target that has been mentioned, although Receptos , Neurocrine Biosciences , Acadia Pharmaceuticals have also been considered. Also mentioned are Sarepta Therapeutics and Bluebird Bio .

“We are in a world of eat or be eaten,” said Eric Schmidt, an analyst with Cowen & Co. to the Boston Globe. “If they don’t deploy their cash efficiently or properly, there’s always a chance that somebody may come in and monetize their assets for them.”

’s recent movements have been behind some of the speculation. On July 20, 2015, shares traded for $408.93 and plunged on July 24, 2015 to $300.03. In the last year, shares spiked on March 20, 2015 at $475.98, up significantly from a Nov. 20, 2014 of $299.53. Shares are currently trading for $312.07.

The most recent loss, related to the change in the company’s annual guidance, got analysts speculating.

“Historically, big companies have shown a heightened sense of smell when blood is in the water,” said Cory Kasimov, an analyst with JPMorgan Chase & Co. in a note to investors. “If a mega-cap company comes to the conclusion that Biogen’s pipeline of potential needle-moving assets comes cheap,” they may come calling.

One potential buyer could be Allergan Plc , which announced on Monday that it was selling its generic drugs unit to Teva Pharmaceutical Industries Ltd. for $40.5 billion. In a conference call with investors, Allergan’s Brent Saunders, chief executive officer, indicated the company might make a big purchase within 18 months.

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