Biogen: Biotech Bet on MS and Alzheimer's

10/21/2016 7:00 am EST


Roy Ward

Chief Analyst, Cabot Benjamin Graham Value Investor

Our latest featured stock is a biopharmaceutical company which delivers therapies for the treatment of neurodegenerative diseases, hematologic conditions and autoimmune disorders, notes value investor J. Royden Ward, editor of Cabot Benjamin Graham Value Investor.

Biogen (BIIB) markets products for multiple sclerosis (MS), hemophilia A and B, and for the treatment of severe plaque psoriasis.

Biogen also collaborates with Genentech to treat non-Hodgkin’s lymphoma and chronic lymphocytic leukemia. BIIB is also developing products for neurodegeneration and for spinal muscular atrophy.

The stock tumbled in June due to disappointing study data for its MS treatment in mid-stage treatment objectives.

Despite the setback, Biogen remains the market-share leader in treating MS and is launching new treatments that improve patient dosing, which will boost sales and profits.

Meanwhile, there are other promising drugs in the company’s pipeline including one in late-stage trials for Alzheimer’s disease that has been fast-tracked by the FDA.

An effective Alzheimer’s treatment could be worth tens of billions in annual sales for Biogen within two to three years. Over five million patients in the U.S. and 44 million people worldwide suffer from Alzheimer’s.

Biogen is streamlining its operations and will spin off its hemophilia business into a company called Bioverative.

The spinoff is scheduled for early 2017. The company’s recent moves have created speculation on Wall Street that Biogen could become a takeover candidate.

Biogen warrants a Value Rating of 5 (5 is best) from Standard & Poor’s, along with a Star Rating of 4 and Quality Rating of B+. I expect BIIB to advance 30% to $387.20 within one year.

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By J. Royden Ward, Editor of Cabot Benjamin Graham Value Investor.

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