Buzz Wears Off at Biogen
Investors focusing on risks for biotechnology companies usually zero in on the pipeline—those drugs at various stages of testing and not yet generating sales. One piece of good or bad news on that front can alter the odds of a company ever seeing a future stream of income worth billions of dollars.
On Friday, Biogen showed a product already on the market can throw a company for a loop, too. In reporting second-quarter results, it said there was “moderated patient growth following rapid initial uptake” for a multiple sclerosis treatment. For those without a medical background, that means “we’ve got problems.”
The drug, Tecfidera, is one of five for treating the neurological disorder that collectively make up more than 95% of Biogen’s sales. The result: Biogen’s stock fell 22% after the results, which also included a big reduction in full-year earnings guidance. Softer-than-expected sales growth may have had something to do with additional warnings concerning Tecfidera’s safety after a patient died last year of a rare brain infection.
And the stock drop added insult to injury: Biogen on Wednesday had released some dispiriting data on clinical trials for a potential blockbuster drug for treating Alzheimer’s. The resulting 4.3% fall in the company’s share price had seemingly gotten the bad news out of the way ahead of the earnings release.
Not quite, and in one sense that shouldn’t be a surprise. With the stock up an eye-watering 630% in the five years leading up to Friday’s tumble, investors’ first instinct understandably was to sell first and ask questions later.
On the bright side, Biogen seems to have come up with a quick cure for vertigo.
— Spencer Jakab
Write to Spencer Jakab at spencer.jakab@wsj.com
