Biogen Stock Forecast: The treatment of dangerous and deadly diseases has advanced by leaps and bounds in recent decades. Some have been completely eradicated, and others can be managed far more effectively using modern techniques.
These developments have dramatically improved patients’ quality of life. Survival rates for once-fatal conditions are going up, and treatments bring fewer side effects than ever before.
Biotechnology companies are leading the effort to find better treatments and more ways to prevent the onset of disease. Occasionally, they even find cures. Biogen is a leader in this space, responsible for the discovery, development, and delivery of therapies to treat autoimmune diseases, neurodegenerative conditions, and hematologic diseases.
Biogen share price has struggled in recent months, and investors are growing concerned. Is Biogen still a smart choice for balanced stock portfolios?
Biogen: The Neuroscience Expert
Biogen [NASDAQ: BIIB] is clear, concise, and straightforward in its mission statement: “We are pioneers in neuroscience.”
Biogen leaders believe this area is one with substantial unmet need, and there is plenty of potential for success in developing breakthrough treatments that will transform lives.
Specifically, researchers are focused on improving the quality of life for those with neurological and neurodegenerative diseases.
Biogen [NASDAQ: BIIB] currently markets nine major products in the United States, and it has a collaboration agreement with Genentech on three more. The company operates in other parts of the world, and in some cases, the product line is different based on which drugs are approved for use in those countries.
Intensive work is going into therapies for Multiple Sclerosis (MS), Amyotrophic Lateral Sclerosis (ALS/Lou Gehrig’s disease), stroke, retinal disease, Alzheimer’s disease, Idiopathic Pulmonary Fibrosis (IPF), Parkinson’s disease, lupus, Trigeminal Neuralgia, Small Fiber Neuropathy (SFN), Progressive Supranuclear Palsy (PSP), and Spinal Muscular Atrophy (SMA). These diseases are debilitating, and some are eventually fatal.
Biogen’s newest drugs are in various stages of the pipeline, and if any one of them is successful, it could be a game-changer for both the company and the patients suffering from these conditions.
However, in practice, drug breakthroughs are rare. Just this year, the company had to abandon what had been a very promising treatment for Alzheimer’s disease after two late-stage trials failed. It is this sort of uncertainty that has investors concerned.
What’s Changed for Biogen in 2019?
The loss of aducanumab, a potential treatment for Alzheimer’s disease, was a devastating blow for the company. The sales potential for a breakthrough Alzheimer’s drug was estimated in the tens of billions – and this wasn’t Biogen’s only setback this year.
Revenues generated from the company’s MS therapies have plateaued, and it will take time for new products to make their way through the pipeline – assuming they make it through at all. If they prove effective, it remains to be seen whether they will offer enough benefit to stimulate meaningful revenue growth.
Finally, Biogen [NASDAQ: BIIB] is facing threats from formidable competitors. For example, Novartis has recently obtained approval for its new gene therapy, Zolgensma. This is likely to draw patients away from Biogen’s primary growth driver, Spinraza, which is effective in treating spinal muscular atrophy.
This perfect storm of challenges has impacted Biogen’s stock price. In the first half of 2019, shares lost 22.3 percent of their value.
Despite its status as a blue-chip stock, investors have been quick to sell and quite hesitant to buy. However, some analysts have indicated this could be an excellent opportunity for investors to add Biogen to their portfolios at bargain prices.
Is Biogen a Buy?
Certainly, Biogen [NASDAQ: BIIB] is going through a difficult period, but there are plenty of reasons to believe that the company’s future is bright. Total sales of MS therapies grew 3 percent year over year, exceeding $2.2 billion for the second quarter of 2019.
Better yet, Spinraza is still bringing in substantial revenues despite the competition from Novartis. In the second quarter, total sales were up 15 percent at $488 million. Business leaders have indicated the Novartis therapy hasn’t had a meaningful impact on Spinraza sales, though that could change in coming months.
Biogen’s advances in biosimilars also holds great promise. Outside of the US, the company markets therapies that successfully compete with Remicade, Enbrel, and Humira. Combined, the three biosimilars contributed 6 percent of Biogen’s total revenue, and sales are climbing rapidly – year over year, they have grown by 45 percent as of the second quarter 2019.
Ultimately, the drugs in Biogen’s pipeline may not survive the rigorous evaluation process, but current results give patients – and investors – reason to be hopeful. An application for MS therapy Vumerity is pending FDA approval, and there are five other candidates nearing completion of trials.
Finally, Biogen continues to focus on increasing its roster of innovative treatments through acquisition of complementary biotechs. Most recently, the June purchase of Nightstar Therapeutics gives Biogen exposure to advanced gene therapies for genetic eye disease.
Specifically, the Nightstar Therapeutics acquisition adds adeno-associated virus (AAV) treatments for inherited retinal disorders to Biogen’s pipeline, increasing the likelihood of a breakthrough in the years to come.
Biogen Stock: The Bottom Line
Biotech investments are notoriously volatile.
Clinical and regulatory setbacks are more common than successes, and the failure of a particularly promising therapy can send share prices off a cliff. Investors who can stomach these sudden drops hold on to the hope of an equally dramatic upswing when and if the company develops a true breakthrough therapy.
Biogen investors are certainly in for their share of ups and downs, but for those able to tolerate risk, this stock is a solid bet. Business leaders are always on the lookout for opportunities to develop or acquire the most advanced treatments available, making this company more likely than most to profit from future breakthroughs in therapy.
Despite setbacks, second quarter total revenues were $3.6 billion, which represents an 8 percent increase year over year, and during the last investor call, Biogen raised its guidance for the remainder of the year.
Revenue forecasts are now between $14 billion and $14.2 billion – up from $13.6 billion to $13.8 billion, and GAAP diluted earnings per share went from an estimated $26.65 – $27.65 to between $29.60 and $30.40.
The release of this news gave stock prices a near-5 percent boost, but shares are still trading lower than they have in recent years. For those interested in the biotech sector, this may be a perfect time to buy.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.