BIIB-Biogen Inc


Biogen was founded in 1978 by a group of highly accomplished scientists, two of whom were Nobel prize winners in chemistry ( Walter Gilbert won it for his work in DNA sequencing) and in physiology( Phillip Sharp won it for the discovery of split genes).

The company is currently trading at $256/share, only $2 away from its 52 week low. I believe Biogen is worth $340-360/share, a potential margin of safety 25-30% from today’s trading price. Some of the major reasons for the recent share price decline were an overall decline in the biotech sector (IBB), Hilary Clinton comments and not meeting EPS estimates two quarters in a row and lowering guidance. Two of the first causes are temporary and reversible with time; the third is as well, although it might take a bit longer and more effort than the first two. A word of caution: The stock might be volatile going forward, at least on the short-term, thus it is not suitable for the conservative/ defensive investor at the present moment.

Biogen derives the vast majority of its revenues from three multiple sclerosis products:
1. Tecfidera (40.2%)
2. Interferon (31.4%)
3. Tysabri( 21.1%)

Tecfidera sales have slowed down recently, as a result of one MS patient who was taking Tecfidera developing progressive multiple leukoencephalopathy( PML) and dying as a result. This case prompted Biogen to introduce warnings on its drug label, in addition to contributing to diminished doctor confidence. With that being said, complications like that with the dying patient have been very rare, and I believe the market has overreacted in this matter. As there is no indication to the contrary, I believe that Tecfidera, Interferon and Tysabri will continue to be strong products for the foreseeable future.


Comments

  • I know this post was from awhile ago, you were right on the stock being volatile. What is your opinion on this stock going forward given the declining market price?
  • edited February 23
    Hey #Evan1425,

    I am not so familiar with Biogen however I better look at their books.

    This is a smaller cap value pick with lots of connection to Biogen. It has since dropped in value even further from when the article was written The only thing is the article ignores that some of those short term liabilities may be recurring. I am seriously considering to take a position. Also this seems more like at least a 1-2 year play or longer.

    http://acquirersmultiple.com/2016/12/an-acquirers-dream-applied-genetic-technologies-corp-nasdaqagtc/
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