Is it too late to buy Biogen shares?

Is it too late to buy Biogen shares?

The numbers of Biogen they do not attract investors. The stock is valued only 5 times sales and 19 times profits. Also last year it only yielded 25%. His focus is not exactly on Covid-19 and he has had problems with his medications. But can we count on the courage? He wonders Zhiyuan Sun en The Motley Fool.

On July 12, Medicare officials began a review of Adulhelm, the firm’s Alzheimer’s drug, to decide who can receive it based on whether the drug is a reasonable and necessary treatment. It is the first of those two criteria that is going to create problems. In clinical studies, it reduced the volume of beta-amyloid plaques in the brains of patients; These plaques are theorized to cause symptoms of Alzheimer’s disease. However, the keyword here is “theorized”, since reducing them did not translate into any significant improvement in the patients’ cognition.

Despite its questionable effectiveness, the drug could cost the Medicare program up to $ 57 billion per year (at a price of $ 56,000 per patient per year) if made available to everyone with Alzheimer’s disease in the US. In that sense, it would be understandable if Uncle Sam was hesitant to cover the drug. Besides, the Acting FDA Commissioner Janet Woodcock, requests an independent investigation into the agency’s approval of Adulhelm. FDA officials allegedly worked “hand in hand” with Biogen representatives for drug approval, although it did not meet the primary endpoints of clinical studies.

Last June, the firm lost a patent litigation battle to salvage its hit multiple sclerosis drug, Tecfidera, of the generic competition. As a result, in the first quarter of 2021, Tecfidera’s sales fell 56% year-on-year to $ 1.693 billion. Brand name drugs generally lose 90% of their revenue after generic versions hit the market.

What’s more, last month, Biogen and Sage Therapeutics released a tepid report on a phase 3 study of their antidepressant candidate. Zuralone. The drug showed statistically significant improvements in terms of relieving depressive symptoms, but its effects were not impressive relative to antidepressants already on the market. This was Sage’s main channeling candidate. Biogen had made a $ 1.5 billion investment in Zuralone in the hopes that it would outperform in clinical studies.

Fortunately, that’s it for Biogen in terms of bad news. Right now, the company has seven late-stage candidates in its portfolio, the most promising of which are biosimilars for successful ophthalmic drugs. Lucentis and Eylea. Biogen also has biologics in phase 3 trials addressed to lupus, lateral sclerosis, choroideremia and hemispheric infarction.

Overall, Biogen anticipates that it will generate up to $ 10.75 billion in revenue and $ 19 in earnings per share (EPS) throughout the year. Those targets represent a substantial decrease from the $ 13.445 billion in revenue and $ 33.70 in EPS it delivered in 2020.

“However, the company’s stock largely has the negative elements valued. Even if Tecfidera sales drop to zero, Adulhelm fails to market and Zuralonone sales decline, it still has a strong last-stage pipeline to lean on. So I think Biogen shares are a good buy in this drop, ”Sun concludes.

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