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DZC CAPITAL RESEARCH TEAM INVESTMENT OUTLOOK (09-12-2019)

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BIOGEN INC (BIIB): BUY

Sector: Healthcare          Industry: Pharmaceuticals

Biogen Inc. is a biopharmaceutical company. The Company focuses on discovering, developing, manufacturing and delivering therapies to people living with serious neurological, rare and autoimmune diseases. The Company markets products, including TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, ZINBRYTA and FAMPYRA for multiple sclerosis (MS), FUMADERM for the treatment of severe plaque psoriasis and SPINRAZA for the treatment of spinal muscular atrophy (SMA). It also has a collaboration agreement with Genentech, Inc. (Genentech), a member of the Roche Group, with respect to RITUXAN for the treatment of non-Hodgkin’s lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, GAZYVA indicated for the treatment of CLL and follicular lymphoma, and other anti-CD20 therapies. The Company’s product candidate includes OCREVUS; Biosimilar adalimumab; Aducanumab; E2609; BIIB074; BAN2401; Opicinumab; CIRARA; BIIB061; BIIB054; BIIB067, and BIIB068.

Trading Statistics

Market Capitalization: 55.382B

Shares Outstanding: 181.9Mso

Average Volume: 2.373M

Recommendation, why?

In late March, Biogen shares lost almost 33% of their value in the wake of uncovering that based on early useless analysis, aducanumab was probably not going to meet the essential endpoints of its phase 3 clinical preliminary. The organization discontinued the treatment’s improvement considering those findings, and the market proceeded onward, making BIIB one of the worst-performing stock of the year. So it was a surprise to essentially everybody outside of Biogen when the organization reported last week that it would submit the medication for FDA endorsement all things considered.

Turns out, when the studies were ended in March, the information accessible to the organization just went through late December. In any case, as further information rolled in during the months that pursued, progressing analysis demonstrated that the medication was compelling in restoring intellectual functions in a subset of Alzheimer’s patients who had taken it in higher doses.

It is phenomenally uncommon for a drug candidate to wind up meeting its essential endpoint after its phase 3 study has been suspended. It would be a first-of-its-sort occasion in the Alzheimer’s speciality, yet more significantly, aducanumab is presently one of only a handful, not many Alzheimer’s drugs that have ever shown positive results.

The news from Biogen’s rivals in the space has been far less optimistic. In July, Amgen and Novartis discontinued trials of umibecestat, the Alzheimer’s competitor they had been growing jointly after information suggested the medication was quickening patients’ psychological decay. Merck’s verubecestat and Roche’s crenezumab have also failed to create results.

It is estimated that the market for Alzheimer’s treatments will be worth $12.4 billion by 2026 when over 5.8 million patients are required to have been diagnosed with the condition. Should Biogen’s drug get FDA approval, it is not hard to envision it catching most of that market, considering the overall absence of rivalry now. Be that as it may, while the absence of viable Alzheimer’s treatments could lead the FDA to expeditiously affirm aducanumab, a thumbs-up is in no way, shape or form assured.

Presently, Biogen trades at a modest 10.2 price-to-earnings ratio, compared to Novartis and Amgen, which exchange at P/Es of 16.1 and 17.3, respectively, or Merck’s a lot higher 33.9. Despite the fact that this makes Biogen – one of the smaller huge top biotechs – similarly less expensive than its peers, there are some negatives to factor into the investment thesis. Specifically, Biogen has less cash close by, than its peers – $2.1 billion, contrasted with Amgen’s $21.8 billion and Novartis’ $8.4 billion. Nor does it offer a dividend, which its competitors do.

The biotech’s essential development driver these days is Spinraza, which treats spinal muscular decay (SMA). Sales for the SMA drug keep on increasing by double-digit percentages year over year, despite the fact that the rate of growth is slowing.

An achievement in the Alzheimer’s market would be a serious deal for Biogen, yet as indicated by most analysts, the chances of regulatory approval are around 50-50 – however, the more bullish experts say its 2-to-1 odds for a positive result.

DZC will be watching Biogen closely for the next few weeks for a buy, Companies like BIIB tends to reverse to their mean after the worst year like this.

BIIB DAILY CHART