Is Biogen Stock A Buy?

Biogen Inc (NASDAQ:BIIB) is a Cambridge, Massachusetts-based biotech company specializing in the treatment of neurological diseases. It made headlines at the end of 2020 when it hosted a “super-spreader” event. Its annual management conference was linked to over 300,000 coronavirus cases in the U.S. in 2020.

This crashed the stock price, leaving bullish investors to wonder is Biogen stock a Buy?

Biogen has a wide drug pipeline that includes government-approved drugs to treat multiple sclerosis, hemophilia, psoriasis, spinal muscular atrophy, and more. It also teamed with Vir Biotechnology to research an experimental COVID-19 vaccine in 2020.

When this failed to pan out, the company setup a biobank to assist in coronavirus research. It then became the mascot for what not to do during a pandemic.

In spite of its mis-steps can Biogen raise investor value?

Biogen Is Focused On Neurological Treatments

Biogen is a large pharmaceutical company that manufactures, distributes, and markets an array of treatments for different health conditions. Each is clinically approved in different countries, ranging from the United States to Canada, Europe, Australia, and beyond.

Its pipeline includes research and development into a variety of ailments, including multiple sclerosis, acute optic neuritis, lupus, and pulmonary fibrosis among other diseases.

It has development agreements in place with a lot of companies to advance research into many chronic and neurological diseases. The company grew through mergers and acquisitions to vertically and horizontally integrate.

Is Biogen Stock A Buy?

Biogen Inc had a market capitalization over $37 billion at the start of 2021, with a P/E ratio over 8x.

Stock prices hit their lowest point during the 2020 holiday season after the company was attached to a superspreader event. BIIB share price traded under $250 a piece into 2021, far below 2020 highs of near $375.00.

It wasn’t the first crash the company has experienced either – more on that below.

The company’s Q3 2020 earnings report showed revenue of $3.37 billion, along with authorization for $5 billion in share repurchases. It represents a 6 percent year-over-year decrease from the same quarter in the previous year.

GAAP-adjusted income for the quarter was $702 million, or $4.46 earnings per share (EPS). It showed an overall decrease in sales, likely triggered by the pandemic. It still repurchased $1.25 billion in stock shares based on its 2019 authorization.

The company had cash and cash equivalents worth $4.59 billion heading into the 2020 holiday season, with $7.43 billion in notes payable. Full year revenue is expected to come in over $13 billion, or around $26 EPS.

Should the pandemic continue dragging on, bulls believe “pandemic stocks” like Biogen have growth potential. However, it has a track record of clinical trial failures that have stunted growth and added risk to the business.

Biogen Stock Anchored By Clinical Trial Failures 

Biogen’s Alzheimer’s drug candidate, called aducanumab, dragged the stock down in 2019 after failing to prove efficacy in clinical trials. This crashed the stock worse (and for longer) than the pandemic did. It didn’t recover until the 2019 holiday season.

From that point, the COVID-10 crash was barely a blip, and investors went on a wild ride as it experimented with a vaccine in a partnership.

But nothing came of it by the end of the year, and management stumbled when reports came out that it brought the secondary coronavirus strain stateside from Europe.

While every other healthcare company focused on curing the pandemic, Biogen took the opportunity to revive its failed Alzheimer’s drug after failing in its COVID bid. 

Clinical trial hurdles aren’t the only hurdle its struggling to overcome. It’s important to view the company through the lens of the competitive landscape too.

Is Biogen Falling Short Of Competitors?

Biogen competes with biopharmaceutical giants, like Sanofi (SNY), Novartis (NVS), Pfizer (PFE), Roche, and GSK. The pandemic already proved that these giants can beat Biogen to the punch. In fact, even smaller companies like Gilead (GILD) and BioNTech forged partnerships for successful vaccines.

Meanwhile, Biogen proved to be all talk and no substance through 2020. It couldn’t obtain Operation Warp Speed grants, and it not only failed in its effort to find a cure but accelerated the spread through its company meeting.

Biogen management entered 2021 as arguably leading the most notorious pharmaceutical company on the planet. Healthcare workers are our most essential, and one can only wonder how many of them were exposed to the virus because of the company’s negligence to follow CDC guidelines. Except we do know the number – 300,000 people were infected from the event. 

Biogen’s competitors already won when they were gifted with the Christmas present of seeing its name blasted in the media associated with accelerating the spread of the disease that its rivals are attempting to stop.

Is Biogen Stock A Buy? The Bottom Line

Biogen is a biotechnology giant specializing in neurological disease treatments. It’s a component of the NASDAQ-100, S&P 100, and S&P 500 and has a broad range of FDA-approved treatments. It also has a history of treatments failing to live up to investor expectations.

The pandemic created Operation Warp Speed to fund coronavirus vaccine research. Although it forged a partnership to experiment on a treatment, Biogen failed to make any progress.

It lost shine to competitors like Gilead Sciences (GILD), Pfizer (PFE), and Astrazeneca (AZN). Then it found a way to dive lower in share price by hosting an event that resulted in a big coronavirus outbreak. The combination crashed the stock to lows it hadn’t experienced since a year before the pandemic.

Resurrecting its failed Alzheimer’s treatment is a Hail Mary play to return the company to good fortune. It’s at high risk of becoming a mascot of everything wrong about the COVID-19 pandemic and so brave investors need would need to believe in the long term prospects of the company to jump on board at this time.

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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.