While Exploring Sale of Its Hemophilia Unit, Some Speculate Biogen Might be Prepping to Buy or be Acquired

While Exploring Sale of Its Hemophilia Unit, Some Speculate Biogen Might be Prepping to Buy or be Bought
April 12, 2016
By Mark Terry, BioSpace.com Breaking News Staff

So, what’s going on with Cambridge, Mass.-based Biogen ? On Friday, Reuters reported that the company was making plans to sell off its hemophilia assets. For the last month, analysts have been speculating on whether Biogen will be the target of an acquisition by Shire or, in light of the Pfizer -Allergan deal falling apart, whether Allergan will buy Biogen.

Analysts and investors have also been speculating on whether Biogen might acquire some companies in order to bolster its sagging revenue and stock price. Companies offered up include Boston-based Vertex Pharmaceuticals and New York-based Acorda Therapeutics . Before the Shire-Baxalta deal came together, the possibility of Biogen acquiring Baxalta was floated.

But Friday’s news that Biogen might be unloading its hemophilia assets sends decidedly confusing signals. Biogen currently has two approved drugs 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.

Company chief executive officer George Scangos has noted before that the hematology program was barely starting when he took over in 2010 and that it “had no strategic ties to anything else we were doing.”

Strategic alignment or not, they did provide some diversity and revenue while the company’s multiple sclerosis (MS) franchise, specifically its Tecfidera, faced challenges and seemed to slide in sales. The company seemed to have two reasonable strategies regarding those hemophilia assets: sell them off or work to bolster that part of the company’s pipeline.

Tecfider was approved in April 2013, but it was linked in October 2014 to a rare brain infection, PML, which received a warning label from the U.S. Food and Drug Administration (FDA) as a result.

There’s also some pending competition. Roche ’s experimental antibody, ocrelizumab, has shown positive early results in treating relapsing-remitting MS, as well as primary progressive MS. There are currently no approved treatments for primary progressive MS, which accounts for about 15 percent of all MS patients. Ocrelizumab received breakthrough therapy status from the FDA in February and is projected to launch sometime in 2017.

Biogen has also run into trouble in Europe. In March, the European Patent Office removed the company’s method-of-use patent on Tecfidera. The company plans to appeal, but if that doesn’t work, they could lose up to $1 billion in sales and its patent exclusivity may last only to 2019 in the U.S. and in Europe, end in 2024.

On the other hand, Biogen’s aducanumab for Alzheimer’s shows promise and if it gets approved, could potentially rake in $10 billion annually. It’s also working on an anti-Lingo drug that could reverse nerve damage caused by MS. The problem is that none of these drugs would be on the market for several years, assuming they get approved, and investors want the company to make some money now after losing $20 billion in market value in the last year.

As Citigroup analysts Robyn Karnauskas and Mohit Bansal wrote in a recent note, “Possible scenarios post such a divesture — 1) Use of cash to acquire a bigger strategic asset, 2) Use of cash for buybacks or 3) Biogen trying to make itself lean and more attractive as a potential merger-and-acquisition target. However, a Biogen takeout may be hard in front of uncertainty related to Forward Pharma patent issue regarding Tecfidera.”

It’s also possible Biogen may want to sell off its hemophilia assets and use the money from the sale to buy something, particularly with biotech valuations so low.

“Karnauskas and Bansal wrote, “Sign of a bigger acquisition or Biogen setting itself up as a target? This news seems surprising, especially because the (hemophilia) franchise is growing and peers in the sector are looking to diversify. Removal of hemophilia business will likely be confusing to the investors. The company is facing a lot of uncertainty in 2016 ahead of several binary events and divestiture of hemophilia biz would make the company more levered to MS marketplace if the entire pipeline fails (unlikely though).”

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