See pubmed.org RISTORI + Bcg
Pubmed.org faustman DL
Faustmanlab.org
Us patent reissue 43,467
Turn not your swords into plowshares when biogen kills, cripples, maims and debilitated
To make money at your expense.
Biogen Has a Cure for Biotech Blues
Jitters about Biogen’s current and future products may produce a rare buying opportunity in a hot sector.
Biogen offices in Massachusetts. The company’s stock is likely to perform well even if the experimental Alzheimer’s drug BIIB037 turns out to be a failure. PHOTO: BIOGEN/ASSOCIATED PRESS
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Apple, schmapple.
The real action in the stock market these days has been in biotechnology stocks such as Biogen Inc. Its shares have trounced those of the iPhone maker by 600 percentage points in the past three years.
Of course, investors in most other industries don’t have to deal with binary outcomes in the event of failure. Microsoft Corp. had its Zune and Ford MotorCo. had its Edsel. But some of those product flops resulted in sales and the latter is even a collector’s item.
If “BIIB037” never sees the light of day, though, it will be an expensive footnote for Biogen and definitely won’t wind up on eBay. Biogen spooked investors earlier this week with mixed news about the experimental Alzheimer’s drug in clinical trials.
Jumpiness is natural given the sector’s moonshot gains. But, unlike small, unproven companies whose valuations have reached the most eye-watering levels lately, Biogen will continue as a profitable going concern even if this week’s news presages failure. Some 97% of its revenue last year came from five drugs for various forms or stages of multiple sclerosis, a chronic illness that remains complicated and expensive to treat.
PHOTO: THE WALL STREET JOURNAL
The company reports second-quarter results Friday. That has shifted investors’ attention to Tecfidera, a drug that had sales of nearly $3 billion in 2014 and is seen reaching $5 billion next year. So far this year, analysts have trimmed their outlook for the drug’s revenue in 2015 by about 2.5% and nearly 5% for 2016. Foreign-currency woes may have been a factor but can’t explain the entire move.
The company’s valuation seems to take fears of lost momentum into account. At 21.5 times projected forward earnings, Biogen fetches about what it did three years ago. Meanwhile, the option-value of a potential Alzheimer’s blockbuster, even for a company Biogen’s size, is significant. Compared with a chronic illness affecting young people, Alzheimer’s cases are set to mushroom due to aging populations.
Given failures of similar experimental drugs by Pfizer Inc. and others, Biogen’s valuation already didn’t imply wonderful odds. This week’s news lowered them a bit, but wasn’t conclusively bad. That, as well as any mild disappointment about Friday’s results, could mean a rare thing for a biotechnology stock in this environment: a buying opportunity.
