December 7, 2016
By Mark Terry, BioSpace.com Breaking News Staff
All eyes will be fixed on Biogen tomorrow as it releases early-stage clinical trial data of its Alzheimer’s drug, aducanumab, as the Clinical Trials for Alzheimer’s Disease (CTAD) annual conference held in San Diego. Positive data could jumpstart the stock, but there are still reasons to be concerned about the company’s position in the market. George Budwell, writing for The Motley Fool, takes a deeper look.
Interestingly, Budwell doesn’t spend much time looking at aducanumab. That may be because, despite tomorrow’spotential boost if the early data is good, the drug wouldn’t hit the market until 2020 at the very earliest. He also refers to it as a “moonshot,” which is pretty much what all Alzheimer’s drugs are at the moment. But if aducanumab turns out to be the real deal, even a modest success could generate $20 billion in peak sales.
Biogen’s multiple sclerosis (MS) franchise is where it’s dominant, but that area is struggling, and faces patent cliffs and increasing competition.
So why is Wall Street otherwise fairly optimistic about the company?
Budwell believes it has to do with optimism over the company’s experimental drug, Spinraza (nusinersen), for spinal muscular atrophy (SMA). It licensed the drug from Ionis Pharmaceuticals in 2013, and has the potential for the broadest possible label expansion for SMA Types 1, 2, and 3 by the U.S. Food and Drug Administration (FDA). Because it is an orphan drug for a rare, but fatal disease, if approved it would likely come with a sky-high price, which could mean huge profits.
“But the real reason the Street is warming up to Biogen seems to be that Spinraza’s peak sales could reach $2 billion in a few short years,” Budwell writes. “Equally as important, the FDA is expected to grant the drug’s approval on an accelerated time frame, with some analysts forecasting a regulatory decision sometime in the first quarter of 2017.”
The worst-case scenario would be the FDA having issues with Spinraza, but so far that doesn’t seem to be a big concern. If that happened, however, Budwell thinks Biogen’s top-line growth would continue forward in the low single digits. And, with a look at the company’s pipeline, if Spinraza doesn’t get approved, future growth would really rest on aducanumab.
“Putting a doomsday scenario aside, though,” he writes, “I’m cautiously optimistic that Biogen and Ionis will get the green light from the FDA for Spinraza sooner rather than later. And this event should pave the way for the biotech to pursue licensing deals and/or acquisitions to bolster its clinical pipeline within the next six to 12 months, creating additional layers of value for shareholders.”
Biogen is currently trading for $283.47.
On Sunday, BMO Capital Markets reaffirmed Biogen’s stock as “market perform” with a price target of $331. Jefferies Group reiterated a “buy” rating on August 23, and on September 22 Piper Jaffray set a $333 price target with a “hold” rating. Zaks Investment Research gave it a “buy” rating and a $352 price target on August 12. On September 5, Vetr upgraded Biogen from a “buy” to a “strong-buy” and set a price target of $352.34.
