Biogen's Shares Down On Rating Downgrade By Baird Analyst

Biogen Inc. (NASDAQ:BIIB) shares declined almost 2.5% on Dec 2, following rating downgrade by an analyst at Robert W. Baird, per a Bloomberg report. The analyst downgraded the company from “Neutral” to “Sell” with a target price of $250, reportedly on concerns related to approval of Alzheimer’s disease (“AD”) candidate, aducanumab, a human monoclonal antibody. The company’s stock closed at $292.39 on Dec 2.

Please note that in October, Biogen announced its intention to seek U.S. approval of Alzheimer’s treatment, aducanumab, a few months after it halted late-stage studies — ENGAGE and EMERGE — on the same candidate, following a futility analysis.

Biogen’s decision was based on results from a new analysis of a larger dataset of the discontinued ENGAGE and EMERGE phase III studies on aducanumab in patients with early Alzheimer’s disease. This analysis was conducted in consultation with the FDA. Biogen, back then, had said that it plans to submit a biologics license application seeking approval of aducanumab to the FDA in early 2020.

The company is scheduled to present additional data from ENGAGE and EMERGE studies at the Clinical Trials on Alzheimer’s Disease meeting on Dec 5. The analyst at Baird expects the data to be presented to be disappointing. There are also doubts about aducanumab receiving FDA approval as a treatment for AD. The analyst stated that the standard for FDA’s approval is substantial evidence of efficacy but mixed outcome results across the two studieson the candidate falls short of this standard.

Meanwhile, there is no treatment available for AD. Aducanumab is the first candidate, which is being pursued for FDA approval. A potential approval to the candidate is likely to generate billions of dollars for Biogen.

Shares of Biogen have decreased 2.9% so far this year against the industry’s rise of 5.4%.

Alzheimer’s, a fatal condition that causes progressive decline in memory, has always been a highly challenging area and not much progress has been made despite significant investments (both funds and resources). Several companies have failed to develop safe and effective treatment options for this deadly brain disease.

In September 2019, Biogen discontinued two late-stage studies evaluating its oral BACE inhibitor, elenbecestat, as a treatment for mild cognitive impairment or mild AD, collectively known as early AD. The studies were discontinued due to unfavorable risk-benefit ratio.

In July 2019, Amgen (NASDAQ:AMGN) and Novartis (NYSE:NVS) discontinued two pivotal phase II/III studies evaluating their BACE1 inhibitor, CNP520, to prevent or delay the symptoms of AD in a high-risk population. In January 2019, Roche (OTC:RHHBY) discontinued two late-stage studies evaluating its humanized monoclonal antibody, crenezumab in AD patients as it was unlikely to meet primary endpoints of the studies. Several large pharma companies, including Merck, Pfizer (NYSE:PFE) and Lilly/AstraZeneca have stopped development of their AD candidates either due to low possibility of success or safety concerns in the past few years.

Zacks Rank

Biogen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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