Biogen Stock: Here’s Why the Bulls Are Running Back to Biogen

Biogen Still Soaring Thanks to Alzheimer BreakthroughBiogen Still Soaring Thanks to Alzheimer Breakthrough

If you’ve contemplated investing in biotech, Biogen Inc (NASDAQ:BIIB) certainly makes the case for this buoyant sector. Biogen stock has gained over 11% in the past six months after a bearish phase. Just over a year ago, BIIB stock hit its all-time high of $475.98. But shares plummeted after the company cooled investor sentiment with weak guidance for the second quarter of 2015.

Now Biogen stock is rising, having gained 2.2% in the past week on more organic prospects than the hit-and-miss game of quarterly earnings. Biogen has made significant breakthroughs in developing a new drug targeting Alzheimer’s disease. This is the kind of thing that draws attention, making it an even more appetizing takeover morsel for the biotech and pharma sector majors.

Biogen Could Be Close to Getting an Alzheimer’s Blockbuster

Biogen’s new drug candidate, aducanumab, got a feature a major scientific publication. (Source: “The antibody aducanumab reduces Aβ plaques in Alzheimer’s disease,” Nature, September 1, 2016.) It made headlines worldwide, but failed to rouse up the markets. So BIIB stock was a bit slow to react. But react it did; it gained over 3.1% on the Friday before the last long weekend of the summer. It seems that the markets had a little Aβ plaque of their own, but they did catch up in the end.

The fact that aducanumab received a U.S. Food and Drug Administration (FDA) fast-track designation—which moves drugs with higher success potential toward market release faster—should make Biogen stock even more appealing.


Scientific interest aside, all that investors need to remember is that aducanumab targets amyloids, which are protein accumulations or aggregates. Medicine has identified these as one of the leading causes of neuro-generative diseases such as Alzheimer’s. Biogen’s new drug can eliminate the beta-amyloid plaques that poison the brain. But—and here’s the real market appeal—it can slow cognitive decline in patients already suffering from Alzheimer’s.

Given the rate of aging among the populations in most rich countries, this promises to be a major blockbuster. A blockbuster is a drug with a $1.0 billion or greater market potential. Biogen has given hope to the people suffering from Alzheimer’s disease. It is one of the most important breakthroughs in treating Alzheimer’s in about 30 years. Medical scientists, however, remain understandably cautious until the study can repeat these so-far excellent, but preliminary, results.

Biogen Has Succeeded Where Many Others Have Failed

Many of its rivals have tried to develop treatments specifically targeting beta-amyloid plaques in recent years. But none have come close to being proven. Most of these antibodies were injected into the blood. Then they had difficulty reaching the brain because of the presence of the blood-brain barrier to pathogens, toxins and other substances in the blood. Meanwhile, Biogen’s aducanumab, which has been tested in 165 patients, has crossed that line.

Brain scans of participants showed that the higher the aducanumab administered dose was, the lower the abundance of amyloid plaques in the brain. In patients receiving the highest dose, there was no longer any trace of the protein and, more interestingly, the cognitive decline associated with the disease progressed more slowly than in other patients.

Biogen is not new to neuro-degenerative treatments. Therefore, BIIB stock relies on their success in an important way. The good news is that Biogen is the key player in the lucrative market for multiple sclerosis, for example. Biogen’s “Tecfidera,” targeting this condition, was approved in 2013 and promptly rose to prominence. Biogen wants to specialize even more on this lucrative market. It plans to spin off its small-but-valuable hemophilia treatments unit to achieve this. (Source: “Biogen’s Alzheimer’s Therapy Granted FDA Fast-Track Status,” The Wall Street Journal, September 1, 2016.)

Biogen has some competition. In August, AstraZeneca PLC and Eli Lilly & Co (NYSE:LLY) received fast-track FDA status for an Alzheimer’s drug, but Biogen has made neuro-degenerative diseases its specialty.

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