1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Barry Cohen
Barry Cohen
Articles (174) 

Alzheimer’s Drug Approval More Critical for Biogen After Patent Decision

Piper analyst considers OK a longshot and another reason not to be bullish on stock

The need for Biogen Inc. (NASDAQ:BIIB) to get its Alzheimer’s drug approved became more urgent this week after the company lost a patent dispute over its top-selling medication.

A West Virginia District Court ruled that a key patent covering Biogen's multiple sclerosis medicine Tecfidera is invalid, a win for the generics company Mylan (NASDAQ:MYL), which could have a copycat on the market as early as next year, according to an article in BioPharma Dive.

The disappointing news shaved about $25 off Biogen’s share price this week, but the stock did bounce back, gaining more than $10 on Friday to close at about $271. Biogen has traded as high as nearly $375 this year.

With the patent setback, Biogen and its investors are now pinning their hopes on the Alzheimer’s drug, aducanumab. Like a phoenix rising from the ashes, aducanumab got new life after it was labeled all but dead last October, when Biogen and its partner Easai Co.Ltd. (TSE:4523) said they were stopping phase 3 testing because the drug simply wasn’t working.

Shortly thereafter, Biogen made a 180-degree turn and said that based on additional data that showed aducanumab was effective against Alzheimer’s, it would file for U.S. Food and Drug Administration approval. So far that hasn’t happened, though Biogen has said it will be done later this year.

60239822e116b1ee8c40e22d4572b6e2.png

Aducanumab’s importance to the Cambridge, Massachetts-based company can’t be overstated. Generic competition could take a big chunk out of Tecfidera sales, which accounted for more than 30% of Biogen’s $14.4 billion in revenue last year.

Biogen is facing a threat on another front, too. Its second best-selling drug, Spinraza, for muscular atrophy, is being challenged by the Novartis (NYSE:NVS) gene therapy and another competitor, from Roche (RHHBY), is on the horizon. To supplement its core MS franchise, Biogen has a pipeline full of what BioPharma Dive called “risky” neuroscience-based drugs.

Biogen said it was disappointed at the decision on Tecfidera and plans to appeal the ruling.

Yet "Biogen themselves seem to acknowledge that a loss here would likely mark the beginning of the end for Tecfidera’s exclusivity," wrote Piper Sandler analyst Christopher Raymond in a note this week.

Biogen does have a more tolerable version of Tecfidera called Vumerity, which was co-developed with Alkermes (NASDAQ:ALKS). But since being approved last October, Vumerity hasn’t done much, bringing in only $7 million during the first two quarters it’s been on the market.

Vumerity "really isn't all that differentiated from Tecfidera," Stifel analyst Paul Matteis wrote.

"Given this dynamic, as well as what we see as little more than a lottery ticket with respect to the aducanumab Alzheimer’s filing/FDA review, we are hard pressed to articulate a bullish thesis," Raymond wrote.

Disclosure: The author holds no positions on any of the stocks mentioned in this article.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

Barry Cohen
Barry Cohen has nearly 40 years experience in communications and marketing, the majority in senior positions at large international health care companies, including Abbott Laboratories and Bayer Inc.

He has contributed to a number of financial websites, writing primarily about the stocks of health care companies.

Rating: 4.5/5 (2 votes)

Voters:

Comments

Please leave your comment:



Performances of the stocks mentioned by Barry Cohen


User Generated Screeners


pjmason14Momentum
pascal.van.garsseHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)