Pharmaceutical company Biogen (NASDAQ:BIIB) delivered a major win yesterday, launching upward 38.3% with about 17 times normal trading volume taking place. The company landed a win for its aducanumab drug, intended to treat Alzheimer's disease, the first such advance in the field since around 2003. The company also released staggering pricing data on the new drug, once released, and both investors and analysts ate the news up as Morgan Stanley revised its position on Biogen stock.
A Drug to Treat Alzheimer's Disease Now a Reality
While trading in Biogen stock was briefly halted on Monday ahead of the announcement from the Food and Drug Administration (FDA), the stock didn't take long to make up the difference. Yesterday morning at 10:45 AM, the Biogen share price was $286.43. By 1:35 PM, the stock hit the day's high of $451.96. It subsequently gave back some of those gains, but by the end of the day closed at $395.85. Signs of further loss were seen in premarket trading—and have continued into this morning's trading session—but nothing especially pronounced. Biogen also found itself the target of unusual options activity, as nearly 14 times the number of call options were purchased on Biogen stock yesterday.
With the approval of aducanumab—also known as Aduhelm—physicians now have a weapon with which to fight back against one of the most insidious of diseases, a disease that steals memories. However, the drug did not come without some controversies from several sides.
One of the biggest issues facing Aduhelm is one of efficacy. An independent panel of experts called for the FDA to reject the drug as far back as November, noting that the drug hadn't actually been shown to slow the progression of Alzheimer's at all. Even the FDA itself noted that there were such issues in play; Dr. Patrizia Cavazzoni, who serves as director for the FDA's Center for Drug Evaluation and Research, noted in a statement that “...data included in the applicant's submission were highly complex and left residual uncertainties regarding clinical benefit.”
The second major issue facing Aduhelm is its pricing. Biogen's CEO, Michel Vounatsos, revealed that treatment with Aduhelm would set patients back $56,000 per year. Vounatsos also revealed Biogen's promise that the drug's price would not increase for four years after its release. Vounatsos cited the fact that there had been no real innovation in the field for two decades behind the substantial pricing, and that insurance would take much of the hit. Biogen is reportedly working with both Medicare and private insurers to address the costs involved.
What Are Financial Analysts Saying About Biogen Stock?
With more than six million Americans, at last report, eligible to take Aduhelm, this could be a major hit for Biogen, and financial analysts are responding, according to our latest research. However, the response has been mixed, and the company currently carries a consensus rating of “hold”, as it has for the last six months.
Six months ago, Biogen stock had 13 “buy” ratings, 15 “hold” and five “sell” to its credit. The picture actually got more bearish three months ago as one of the “buy” ratings departed the field. A month ago, things started to improve as the ratings pool shifted to 12 “buy”, 14 “hold” and four “sell”. Today, the improvement is much more stark: there are currently 13 “buy” ratings and 19 “hold” ratings on the stock. The sellers have left altogether.
Recent developments have been even more weighted in Biogen's favor. Yesterday, Cowen not only upgraded the stock from “market perform” to “outperform”, but doubled the price target from $225 to $450. Seven analysts—including Cowen—have upgraded Biogen stock, and in the last two days, eight different analysts have raised price targets, often substantially. Cowen's doubled target is nothing unique, either; Citigroup better than doubled its target from $200 to $440, and Robert W. Baird came close to double as it upgraded from $216 to $382 per share.
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