BIIB - Biogen Inc

[feynmanresearch]

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).  I have included a timeline of Biogen’s most important events later in the thesis.

 

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 remain strong products for the foreseeable future.

 

Here are some highlights of its history, from company’s own website:

“

1979

• Biogen scientist Charles Weissmann, M.D., Ph.D., announces that he has successfully cloned biologically active human leukocyte (alpha) interferon. Biogen grants worldwide license to Schering-Plough for the interferon alpha.

• Biogen scientist Kenneth Murray, Ph.D., synthesizes bacteria of hepatitis B virus protein antigens.

1985

• Silicon Valley venture capitalists join forces with research scientists to establish IDEC Pharmaceuticals in San Francisco, California. The goal is to develop and commercialize monoclonal antibodies.

1986

• With approval from the United States Food and Drug Administration (FDA), Schering-Plough begins sales of INTRON® A (interferon alfa-2b), the first Biogen-developed product brought to market. INTRON® A is a treatment for leukemia.

• Biogen establishes its first manufacturing facilities.

1989

• Biogen announces FDA approval of a recombinant hepatitis B vaccine from SmithKline Beecham (now GlaxoSmithKline). The vaccine used technology licensed from Biogen.

1993

• Dr. Murray is knighted for his discovery of hepatitis B antigens.

1996

• Biogen announces FDA approval of AVONEX® (interferon beta-1a) for the treatment of relapsing forms of multiple sclerosis (MS). It is approved in the European Union one year later.

1997

• The FDA approves IDEC’s RITUXAN® (rituximab) for certain types of B-cell non-Hodgkin’s lymphoma. This is the first monoclonal antibody therapy to be approved for a type of cancer. The FDA eventually approves RITUXAN for treatment of rheumatoid arthritis, granulomatosis with polyangiitis (Wegener’s granulomatosis), microscopic polyangiitis and chronic lymphocytic leukemia.

2000

• Biogen introduces MS ActiveSource®, a comprehensive support service for multiple sclerosis patients and caregivers.

2003

• Biogen breaks ground on a new manufacturing facility in Denmark.

• Biogen and IDEC merge, creating Biogen Idec (NASDAQ:BIIB).

2004

• The FDA approves TYSABRI® (natalizumab), a monotherapy for the treatment of patients with relapsing forms of multiple sclerosis.

2005

• Biogen Idec and collaborator Elan Pharmaceuticals voluntarily remove TYSABRI® (natalizumab) from the market after the emergence of one confirmed and one suspected case of a serious side effect called progressive multifocal leukoencephalopathy (PML), an infrequent but serious brain infection that leads to death or severe disability.

2006

• After Biogen Idec’s exhaustive reevaluation of TYSABRI® (natalizumab) and review by an FDA Advisory Board, FDA reapproves TYSABRI for marketing, and the therapy is reintroduced in the United States. and released in the European Union with a warning for PML.

• Biogen Idec acquires Fumapharm AG. This European company developed the technology that eventually leads to the approval of TECFIDERA® (dimethyl fumarate), a therapy for relapsing forms of multiple sclerosis.

2007

• Biogen Idec acquires Syntonix Pharmaceuticals, which eventually leads to the development of two hemophilia therapies.

2009

• Biogen Idec receives a license from Acorda Therapeutics to commercialize Fampridine outside the United States. In 2011, Biogen Idec received European approval for Fampridine, now called FAMPYRA®, as a treatment for the improvement of walking in adult multiple sclerosis patients.

2010

• Biogen Idec refines its business strategy by focusing on new therapies in neurology, immunology and hemophilia.

• The FDA approves RITUXAN® (rituximab) plus chemotherapy for treatment of chronic lymphocytic leukemia.

• The company enters into a licensing agreement with Knopp Neurosciences, which brings in dexpramipexole, a compound that the company investigates for treatment of amyotrophic lateral sclerosis (ALS).

2011

• The AVONEX® PEN™ (interferon beta-1a) is launched in the European Union and Canada. It will be approved in the United States. the following year, along with AVOSTARTGRIP®. These products offer dosing innovations to multiple sclerosis patients.

• Biogen Idec business development executes deals with Portola Pharmaceuticals, on oral therapy for autoimmune diseases, and with Samsung Biologics on biosimilars to form a joint venture now called Samsung Bioepis.

2012

• Biogen Idec helps to create a new research consortium to identify new approaches to treating amyotrophic lateral sclerosis (ALS).

• Biogen Idec collaborates with the National Hemophilia Foundation, the American Thrombosis and Hemostasis Network, and the Puget Sound Blood Center on a nationwide program that offers free genetic testing to people with hemophilia and their families.

• Biogen Idec announces a collaboration with Isis Pharmaceuticals to identify new approaches in treating spinal muscular atrophy (SMA), myotonic dystrophy type 1 and neurological/neuromuscular disorders.

• The company acquires Stromedix, a biotechnology company focused on innovative therapies for fibrosis and organ failure.

2013

• Biogen Idec announces disappointing Phase III results for dexpramipexole, which is being investigated for treatment of amyotrophic lateral sclerosis (ALS). The study revealed that dexpramipexole does not slow the progression of ALS.

• TECFIDERA® (dimethyl fumarate), a new oral therapy for relapsing forms of multiple sclerosis, is approved in the United States, Canada and Australia. It will be approved in Europe a year later.

• Biogen Idec completes its acquisition of all rights to TYSABRI® (natalizumab) from Elan Pharmaceuticals International, Ltd., an affiliate of Elan Corporation.

• The FDA approves GAZYVA® (obinutuzumab) for chronic lymphocytic leukemia. Biogen Idec collaborated on GAZYVA with Genentech, a wholly owned subsidiary of Roche Pharmaceuticals.

• New collaborations include agreements with Galapagos NV subsidiary BioFocus on treatment for the autoimmune skin disease scleroderma, and with Isis Pharmaceuticals on therapies for neurological disorders.

2014

• The FDA approves ALPROLIX® [Coagulation Factor IX (Recombinant), Fc Fusion Protein] (for hemophilia B) and ELOCTATE®[Antihemophilic Factor (Recombinant), Fc Fusion Protein] (for hemophilia A) — the first new treatment advances for these diseases in nearly two decades.

• PLEGRIDY® (peginterferon beta-1a) is approved by the FDA for the treatment of relapsing forms of multiple sclerosis (MS) and in the European Union for relapsing-remitting MS.

• The company finalizes collaboration agreements with Sangamo BioSciences on therapeutics for hemoglobinopathies and with Eisai to jointly develop and commercialize therapies for Alzheimer’s disease.

2015

• Biogen acquires U.K.-based Convergence Pharmaceuticals, a clinical-stage biopharmaceutical company, adding to its portfolio of pipeline candidates for neuropathic pain.

 

[feynmanresearch]

Not tooting my own horn, but it looks like I was right on Biogen

[mcmaaaaath]

You say its worth ~$350-- why?

[feynmanresearch]

You say its worth ~$350-- why?

 

It could be worth as much as $350, depending upon how well they perform in the near future. If they have the ability to maintain their current strong results, I believe that they could unlock $350 in the next 2-3 years

[feynmanresearch]

$293 per share right now.I believe they have room for at least $30-$35 increase per share

[feynmanresearch]

Still believe that Biogen will be a strong performer in 2016

[walkie518]

recent drop due to abandonment of aducanumab (and elenbecestat?)

 

anyone have a feel for the other 4 Alzheimer’s drugs? 

[Spekulatius]

recent drop due to abandonment of aducanumab (and elenbecestat?)

 

anyone have a feel for the other 4 Alzheimer’s drugs?

 

I think any drug that targets amyloid are highly suspect at this point, because there have been quite angewiesen failures targeting this pot. disease path. I think Biogen has one more drug (BEN2401 Phase II) targeting amyloid while the other drugs target other pathways. Alzheimer is high risk/ high reward without question.

[walkie518]

recent drop due to abandonment of aducanumab (and elenbecestat?)

 

anyone have a feel for the other 4 Alzheimer’s drugs?

 

I think any drug that targets amyloid are highly suspect at this point, because there have been quite angewiesen failures targeting this pot. disease path. I think Biogen has one more drug (BEN2401 Phase II) targeting amyloid while the other drugs target other pathways. Alzheimer is high risk/ high reward without question.

yes...my guess is safety and some efficacy could be a homerun in that space?

 

there are a lot of other drugs in the pipeline though and the drop has made the stock fairly interesting (though trying to wrap my head around the figures)

 

does anyone have a feel for BIIB's historical failure rate? 

 

[Spekulatius]

recent drop due to abandonment of aducanumab (and elenbecestat?)

 

anyone have a feel for the other 4 Alzheimer’s drugs?

 

I think any drug that targets amyloid are highly suspect at this point, because there have been quite angewiesen failures targeting this pot. disease path. I think Biogen has one more drug (BEN2401 Phase II) targeting amyloid while the other drugs target other pathways. Alzheimer is high risk/ high reward without question.

yes...my guess is safety and some efficacy could be a homerun in that space?

 

there are a lot of other drugs in the pipeline though and the drop has made the stock fairly interesting (though trying to wrap my head around the figures)

 

does anyone have a feel for BIIB's historical failure rate?

 

The failure of the two Alzheimer drugs erased ~$20B in market cap or 30% of the company’s value. Given that their existing franchise in MS is quite durable and that the rest of the pipeline looks quite promising, this seems a bit too much. For me, it is cheap enough for a first buy - I got some shares today after hours.

 

I have followed them on and off for years. This is one of the companies that got the biotech business started and they have shown to be quite adept over time. I note that quite a few drug companies have become cheap lately - GILD, ABBV, BMY (to be merged with CELG) and I think there are opportunities in this sector.

[Spekulatius]

This warrants a further look again imo. The Alzheimer’s drug (Aducanumab) is back on, but the filing is apparently delayed. This is still high risk drug in any case, but I think the rest I’d the franchise cover the current market valuation. Anyone tracking this one closely. I sold the few shares I bought back then but think about buying back in.

[sleepydragon]

I bought a little, to ease my guilt of having bought MO :)

 

It has the lowest debt among the bigger bio companies, very profitable, and very high revenue per employee that is comparable to cigarettes companies or Google.

It’s not capital intensive nor labor intensive.

 

I have no idea if their Alzheimer drug will work though.

 

 

[mwtorock]

The risk of BIIB is the competition from biosimilar that is going to sooner or later eat into the high margin revenues, for example anti-CD 20. The stock price is depressed for that reason. If the Alzheimer drug do not get through, BIIB would see decline in revenue.

 

BIIB is betting big in Neuroscience and spun off unrelated businesses to focus on that. A break through in this area like an approved treatment for Alzheimer would probably give Biogen 10 years dominance like a monopoly. However, so many other companies failed to break through before so people don't give high odds to BIIB.

 

I own a bit for more than 10 years now probably. The previous management team was great, and created lots of value. I do not really know about this management team, but so far I chose to trust the pick of the previous CEO for succession. The shares do seem to be a little undervalued to me.

[mwtorock]

FDA looks like nodding head on this one:

https://www.fda.gov/media/143503/download?source=news_body_link

 

[LearningMachine]

Setting aside what happens with Biogen's aducanumab investment (which may or may not be a total failure), anyone here figuring out how will Biogen do on other investments it has made in other small biotech companies?  

[mwtorock]

https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-set-rule-controversial-biogen-alzheimers-drug-2021-06-07/

 

FDA approved Alzheimer drug. Cograts to the ones who had faith! 

[Gregmal]

https://seekingalpha.com/news/3704227-sen-wyden-calls-biogen-alzheimers-drug-price-unconscionable-in-tweet

 

Its already starting. Let the company spend tons of time, and tons of money researching a breakthrough treatment for a condition we currently dont have much of anything for, and then jump in like a cocksucking leach and give your freeloading 2c about what it should cost.....Basically the government thinks it should let private companies foot the bill for these things and then once approved they just hijack them. 

[MVP444300]

2 hours ago, Gregmal said:

https://seekingalpha.com/news/3704227-sen-wyden-calls-biogen-alzheimers-drug-price-unconscionable-in-tweet

 

Its already starting. Let the company spend tons of time, and tons of money researching a breakthrough treatment for a condition we currently dont have much of anything for, and then jump in like a cocksucking leach and give your freeloading 2c about what it should cost.....Basically the government thinks it should let private companies foot the bill for these things and then once approved they just hijack them. 

 

Completely agree!   If that alzheimers drug works think of the cost it could save both the govt/insurance from not having to put people into homes or hire someone to take care of those with that dreaded disease.   The benefits probably out weight the cost.

 

 

[patience_and_focus]

30 minutes ago, MVP444300 said:

 

Completely agree!   If that alzheimers drug works think of the cost it could save both the govt/insurance from not having to put people into homes or hire someone to take care of those with that dreaded disease.   The benefits probably out weight the cost.

 

 

 

It should not have been approved in the first place. It failed 2 clinical trials. It works not much better than the placebo control arm (essentially like comparing to sugar pill / infusion). Biogen abandoned the trial midway. Then sensing the desperation in the community to find treatments (any crap new treatment for that matter in 20-30 years) pushed the drug through. 

 

https://www.biopharmadive.com/news/biogen-aducanumab-alzheimers-fda-drug-review/600897/

"The announcement came as a shock. Late in 2019, Biogen revealed it would ask the Food and Drug Administration to approve an experimental Alzheimer's disease drug that, just seven months earlier, the biotech had said was unlikely to work."

"Strikingly, the regulator played a direct role in encouraging Biogen's reassessment of its negative clinical trial results — support that has little, if any, precedent."

"Over the past two decades, drugmakers have advanced more than 20 drugs aimed, in various fashion, at these "amyloid" plaques, only for every one to fail in clinical trials."

 

I think insurance companies should resist paying for it but will have no choice but to pay for this crap. Why should I pay more as my health insurance will go up over time because millions of people will be prescribed this medication for 56K/year that does not really work. Private insurance companies will have to foot the bill only to recoup that cost from others by raising premiums. At the end since it doesn't work, insurers will anyway have to pay for hospital care of these patients. If patients want the drug, they should pay the entire bill out of pocket.

Edited June 8, 2021 by patience_and_focus

[Gregmal]

The answer to that is that it shouldn't be approved if this is the case. I have been told that these people "follow the science" but there's plenty of evidence that this isnt true. 

[patience_and_focus]

36 minutes ago, Gregmal said:

The answer to that is that it shouldn't be approved if this is the case. I have been told that these people "follow the science" but there's plenty of evidence that this isnt true. 

 

This assumes that there is a central body (govt or non-govt) with power to approve or reject a medicine.

 

The other proposed alternative is the libertarian utopia where drug companies are free to peddle any drug for a disease and its up to consumers / patients to make sense of the data and go for one drug vs another. No central authority needed. 

 

Food for thought.

Edited June 8, 2021 by patience_and_focus

[Spekulatius]

This was always a political motivated position. It is questionable if the drug works, based on data, but advocate groups likely influenced the decisions as well as the absence of any drug hitting the market for the last 20 years.

The price is a political decision to. I suspect that 80% of those patience who get the drug will be on Medicare? So we all will pay for it and hence the government has a say on pricing, one way or the other.

 

[no_free_lunch]

The drug does work in that they have shown with higher doses to slow the growth of plaque.  However, it is not clear if slowing plaque growth actually improves outcomes.  I look at it as I would want to take the drug if I had alzheimers, based on what I have read, so what is the harm here.  It hasn't shown to cause particularly negative side effects so if nothing else, this is a live clinical trial and maybe we can learn something from how people respond.

 

As an investment, I missed it and I will just watch from the sidelines. 

Edited June 10, 2021 by no_free_lunch

[patience_and_focus]

I want to start off by saying that my response below is not meant to be personal. There is a lot of half baked articles out there not doing justice to the complexity of the situation and significant fiscal and other ramifications of this decision on the society. It is also going to poison the well, politically speaking, for genuinely good drugs that work and come with a high list price tag but eventually are cost effective over long term. Hence the passion.

 

3 hours ago, no_free_lunch said:

The drug does work in that they have shown with higher doses to slow the growth of plaque. 

 

Lots (literally tens to hundreds) of significant physiological/neuronal changes happen in the brain of a person with alzheimers that is different from a healthy brain. One of them is growth of amyloid plaque. It was theorized that growth of this kind of plaque is the cause of alzheimers (and not just a side effect of something else that causes alzheimers and as well as plaque). So theory was tested - slowing/stopping  growth of plaques should slow/stop alzheimers. Well, the drug does slow the growth of plaque but does not slow the disease. So what is the result - (a) theory is wrong and drug is useless or (b) drug is doing a great job as it slows plaque growth?

 

 

3 hours ago, no_free_lunch said:

However, it is not clear if slowing plaque growth actually improves outcomes. 

 

Actually it is quite clear now that slowing plaque does not improve outcomes after 20 failed potential drug candidates going after the plaque theory.

https://www.biopharmadive.com/news/biogen-aducanumab-alzheimers-fda-drug-review/600897/

"Over the past two decades, drugmakers have advanced more than 20 drugs aimed, in various fashion, at these "amyloid" plaques, only for every one to fail in clinical trials."

 

3 hours ago, no_free_lunch said:

I look at it as I would want to take the drug if I had alzheimers, based on what I have read, so what is the harm here.  It hasn't shown to cause particularly negative side effects so if nothing else, this is a live clinical trial and maybe we can learn something from how people respond.

 

1. 40% patients (out of a ~1100) got brain swelling (35% soldiered on in clinical trial and 5% dropped out). Nearly 20% then got micro-hemorrhage. See table 3 on page 6 of the drug's official label information here - https://www.accessdata.fda.gov/drugsatfda_docs/label/2021/761178s000lbl.pdf. Biogen in 2019 halted the trial for futility of continuation (literally that was the reason given - I am not kidding). My take - they did not want to find out if they had actually decreased survival time of patients as alzheimers complications pile up over time resulting in death.

 

2. Its a 56,000/year drug that

           (a) will be administered for years in potentially millions of patients ($$).

           (b) has to be administered in an out-patient hospital facility every time as it is an infusion ($$)

           (c) followed up with very frequent MRI's and other tests to monitor side effects ($$)

   There are currently 6 million patients in US. If 1/3 ask for this in the next 2 years that is minimum 112 billion / year just from the drug. All this extra expense will be first absorbed by private insurance and medicare and eventually by the society for non-existent benefit and a whole bunch of side-effects. I have no problems with the price tag if the drug actually works. But it just doesn't (in contrast see Harvoni from Gilead - cure rate of ~ 90% , list price $84000 for 12-week treatment).

 

3 hours ago, no_free_lunch said:

this is a live clinical trial and maybe we can learn something from how people respond.

 1. It is not a live clinical trial. Patients will not be screened / selected as carefully and there will be no placebo control arm (which by the way was as effective as this drug with hardly any side effects). 

2. What we have learned from the 20 different drug failures in 20 years is that plaque theory (and its treatments), at least in its current form, are useless.   

Edited June 10, 2021 by patience_and_focus

[Jurgis]

Thanks @patience_and_focus. It is a sad situation.