Biogen stock crashed in early November after a Food and Drug Administration committee said a single Phase 3 study of its Alzheimer's treatment isn't enough for approval.
XNow, Wall Street is waiting to see if the FDA will approve the controversial Biogen (BIIB) drug, aducanumab. The agency isn't bound by the committee's recommendation and, during the meeting, offered positive commentary on the experimental treatment.
Last summer, the FDA granted aducanumab a speedier priority review. While the FDA said it expected to make a decision by March 7, Biogen said it plans to act early on this application under an expedited review if possible.
Investors also await results from a new collaboration Biogen in a treatment for Parkinson's disease. Further, a patent battle ended in Mylan's favor, and now Biogen's biggest moneymaker, multiple sclerosis drug Tecfidera, could face generic rivals.
All this comes amid the coronavirus pandemic. Biogen is working with a biotech company, Vir Biotechnology (VIR), on a coronavirus treatment.
So, is Biogen stock a buy as of January 2021? (Related: Is it time to buy or sell these other large-cap stocks?)
Biogen Stock Analysis: Earnings, Sales Rise
Biogen's biggest business stems from treating multiple sclerosis. The biotech company also makes spinal muscular atrophy drug Spinraza, and biosimilars of drugs from Amgen (AMGN), AbbVie (ABBV) and Johnson & Johnson (JNJ).
But third-quarter sales and earnings declined — reversing from a years-long growth trend. Sales slipped 6% to $3.38 billion. Adjusted earnings fell 4% to $8.84 per share. This puts Biogen stock out of reach for investors following CAN SLIM rules for investing. Savvy investors should look for stocks that tack on 20%-25% recent sales and earnings growth.
In the fourth quarter, analysts polled by FactSet expect Biogen earnings of $4.82 a share and sales of $2.8 billion, down a respective 42% and 24%.
Biogen stock has a Composite Rating of 52 out of a best-possible 99. The CR is a 1-99 score of a stock's fundamental and technical growth metrics. This puts Biogen stock toward the middle of all stocks in terms of key growth measures.
Shares of the biotech company have an EPS Rating of 86, reflecting Biogen's two-year streak of double-digit quarterly earnings growth prior to the third quarter. That puts Biogen stock in the top 14% of all stocks by earnings metrics.
Technical Analysis Of Biogen Stock
Biogen stock isn't currently forming a definitive chart pattern. Shares surged 44% to a nine-month high on Nov. 4 after the FDA posted briefing documents ahead of an advisory committee meeting on aducanumab.
But shares collapsed about 28% on Nov. 9 after the FDA panel voted against recommending the approval based on a single successful final-phase study.
Earlier, Biogen stock popped more than 10% on Aug. 7 after the FDA assigned the experimental Alzheimer's treatment a speedy priority review. This means aducanumab could receive approval sooner than expected in early March.
As of the close on Jan. 27, Biogen stock was well below its 200-day moving average but above its 50-day line.
The biotech stock has a poor Relative Strength Rating of 8. The RS Rating measures a stock's 12-month performance relative to other stocks. Leading stocks tend to have an RS Rating of 80 or above. With its RS Rating, Biogen stock trails most stocks in terms of 12-month performance.
What Does 2019 Say About The Biotech Company?
Biogen sales rose 7% in 2019. But that was far below the 40% growth it reached in 2014.
Profit growth has been escalating, however, rising 28.1% in 2019, 20.1% in 2018, and 7.9% in 2017.
For 2020, analysts call for Biogen earnings of $33.75 a share, on an adjusted basis. Earnings would climb 1%. Analysts expect sales to decline 7% to $13.4 billion.
New Challenges Arise In Multiple Sclerosis
Biogen's biggest moneymakers include multiple sclerosis treatments like Tecfidera and Tysabri. In the third quarter, multiple sclerosis treatment sales decreased 8.1% to $1.99 billion.
Mylan succeeded against Biogen in a patent challenge for Tecfidera in June. Now, the generic-drug maker can launch a cheaper competitor to Tecfidera. Biogen says it's planning to appeal the decision. That process could take 12-18 months, according to an analyst report.
At a virtual MS conference in early September, the Cambridge, Mass.-based company presented new data backing the safety and effectiveness of four of Biogen's MS drugs: Tysabri, Avonex, Plegridy and Vumerity.
In the third quarter, Biogen trimmed its revenue outlook for 2020. Now, the biotech company expects full-year sales of $13.2 billion to $13.4 billion.
Sales of Spinraza also face a challenge from Novartis (NVS) gene therapy Zolgensma. In the third quarter, Spinraza sales skidded 10% to $495 million.
It's also important to note that patients receive several "loading doses" of Spinraza in their first year of treatment. Then they move to less frequent maintenance dosing. Sales of Spinraza now are growing at a slower pace as more patients move to the maintenance schedule.
Biogen Stock News: Alzheimer's Treatment
The November action by the FDA committee was a big hit on Biogen's Alzheimer's plans.
It's important to know that aducanumab succeeded in a Phase 3 test called Study 302 or Emerge, but failed in a final-stage test called Study 301 or Engage. Biogen also has a midstage test called Study 103 that it says backs aducanumab's effectiveness.
But the FDA advisory committee said it doesn't believe the successful Study 302 and Study 103 can be used as primary evidence of the Alzheimer's treatment's effectiveness. Ten panelists voted no. Only one was uncertain and none voted yes.
The FDA could still approve aducanumab even without the advisory committee's backing.
If approved, aducanumab will be the first disease-modifying Alzheimer's treatment on the market, Biogen says. It has been 17 years since the FDA last reviewed an application for a new Alzheimer's treatment.
The Alzheimer's treatment remains a risky asset for Biogen stock. In October 2019, Biogen reversed an earlier decision to scrap aducanumab development after the Alzheimer's treatment appeared to succeed in one of two key Phase 3 studies. Previously, Biogen said the drug had failed.
Last December, Biogen unveiled the results of a broader analysis, which was limited to patients who received a full schedule of the high dose. On a measure of cognition, aducanumab showed a 30% benefit in a study called Emerge, and a 27% benefit in a test called Engage.
Biogen Enters Several Partnerships
In early August, Biogen announced a collaboration with Denali Therapeutics (DNLI) on a Parkinson's disease treatment. Biogen committed more than $1 billion upfront, buying an 11% stake in Denali and making a $560 million upfront payment. It also could give Denali up to $1.125 billion in payments for reaching certain milestones.
In addition, Biogen has a partnership with Sangamo Therapeutics (SGMO) to develop gene regulation therapies for neurodegenerative disorders, including Alzheimer's disease. Gene regulation allows a medicine to induce or repress how much of a gene is expressed.
Biogen also is in Phase 3 testing of a treatment for amyotrophic lateral sclerosis — also called Lou Gehrig's disease — as well as stroke and choroideremia, a rare eye disease.
The latter stems from Biogen's acquisition of Nightstar Therapeutics for $800 million in June.
Further, in March, Biogen teamed up with Vir in the hunt for a coronavirus treatment. Biogen is making Vir's experimental coronavirus treatment. Vir's antibody approach to Covid-19 could result in either a coronavirus treatment or a preventive drug.
Is It Time To Invest In Biogen Stock?
No, it's not time to buy Biogen stock, as of January 2021.
Shares aren't currently forming a definitive chart pattern.
Sales and earnings declined in the third quarter and sales are expected to do the same in the fourth. That would rule Biogen stock out based on CAN SLIM rules for investing.
Aducanumab stands a chance of being a high point for Biogen. But analysts expect Biogen stock to be choppy as investors wait for the FDA review. There's no guarantee the FDA will approve aducanumab in Alzheimer's treatment.
Further, Biogen and Vir are teaming up on a coronavirus treatment, but there's no guarantee that treatment will pan out in clinical studies. This comes as Biogen faces a new rival in spinal muscular atrophy and questions regarding sales of multiple sclerosis treatments.
The Parkinson's partnership with Denali also will take time to judge.
Investors should also keep an eye on sales growth as well as ongoing efforts for new multiple sclerosis treatments, plus the result of Biogen's appeal in the Tecfidera patent case.
Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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