Sources Reveal Biogen is Exploring Sale of Hemophilia Assets

Sources Reveal Biogen is Exploring Sale of Hemophilia Assets
April 11, 2016
By Mark Terry, Breaking News Staff

Investors are spending a lot of time these days wondering if someone might acquire Cambridge, Mass.-based Biogen , or if Biogen might open its coffers and buy another company. But on Friday Reuters reported that Biogen is looking to sell its hemophilia assets.

Biogen has been a leader in multiple sclerosis treatments and in October announced it was going to pivot and focus on Alzheimer’s medications. The company’s hemophilia assets have often been viewed as an odd match for the company’s core areas of central nervous system and autoimmune diseases.

Biogen currently has two approved drug for hemophilia, Alprolix and Electate. In 2015, the two drugs collectively brought in about $500 million, which was their first full year on the market.

In a Feb. 9 interview with Xconomy George Scangos, Biogen’s chief executive officer, said that the hematology program was in its infancy when he took over the company in 2010 and “had no strategic ties to anything else we were doing.”

He said that he originally planned to unload the hemophilia assets, but eventually decided to keep them because it was less of a gamble to develop them at that time than to shift to something newer. “So now we have it,” he said, “and it still has no strategic alignment with the rest of what we’re doing.”

So strategically the options were likely sell them off, expand into the hematology market, or let them run their course without putting many resources into them. “If all we were going to do was market those two compounds and let them run their life cycle then we should probably just sell them, right?” Scangos said. “If we’re gonna be in it we need to be making investments for the future and the next generation of products, and care about this.”

So investors tended to think Biogen was going to look to bolster that part of the company. Now it seems Biogen is in talks with an investment bank to sell off the assets.

Potential buyers include Baxalta , which brings in about 60 percent of its revenue from hemophilia. It has bestselling drugs like Advate and Feiba. Advate is one of the most prescribed drugs in the world for hemophilia, with a price tag that runs from $200,000 to $500,000 for a year’s prescription. Late in 2015, Baxalta expanded its regulatory approvals for bleeding disorders&mdashAdynovate in the U.S. and Obizur in Europe, both for hemophilia A, and Vonvendi in the U.S. for Von Willebrand disease.

Baxalta is being acquired by Shire PLC .

Bayer AG might be interested in Biogen’s hemophilia assets. In 2015, Bayer’s Kovaltry for long-lasting hemophilia A received approval in the U.S. and Europe. It also has a mature blockbuster drug for hemophilia called Kogenate.

And Novo Nordisk A/S has a strong hemophilia portfolio with NovoSeven and NovoEight. It has also filed for approval for a pipeline candidate for long-acting factor IX hemophilia B, and has a factor VIII hemophilia A drug in Phase III clinical trials.

Biogen on July 20, 2015, then plunged to $300.03 on July 24. It’s never really recovered. It traded on Oct. 13 for $256.04, rose to $309.67 on Dec. 29, then dropped to $245.11 on Feb. 11, 2016. It is currently trading for $270.83.

The most recent pop in Biogen stock seemed related to the announcement last week that the Pfizer -Allergan deal was being abandoned and Allergan might have some interest in acquiring Biogen.

However, Jim Cramer and Jack Mor, TheStreet’s porfolio manager and research director, respectively, writing for The Street, wasn’t convinced that Allergan buying Biogen made sense. “Allergan is interested in businesses that are growing at rates that are similar to, if not higher than, its own growth rate—10 percent annualized sales growth and 15 percent annualized earnings-per-share growth expected from 2016 to 2019. Biogen at best is expected to grow revenues and EPS at roughly five percent to seven percent on an annualized basis over the same time period, which does not fit the Allergan bill.”

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