BIOGEN: A “BUY” FOR THE BOSTON BRAINTRUST?

Boston has long been referred to as “The City Upon the Hill.”  Today it’s true that the city stands alone in terms of biotech talent. Almost as classic as the city itself is Biogen; one of the original names in Biotech. With access to the strongest biotech talent pool in the world, is this “oldie but goodie” still a “buy?”

Biotech Correspondent John Coughlin investigates…..

Within the broader scope of biotechnology, Boston has emerged as a leader in the field of housing and creating opportunities for biotech companies. According to Biospace, Boston is #1 in the cluster of science jobs, housing a total of 82,075 employees across the city. 

Along with the title of job opportunities, Boston is among the most impressive cities regarding education. The Greater Boston area includes esteemed colleges such as MIT, Harvard University, and Tufts University. Among these colleges are talented undergraduates who, after college, will flock to the city to find jobs. 

Within Boston, many of these jobs can be found in the Longwood Medical and Academic Area, which hosts prestigious hospitals and academic facilities. Although central Boston may hold the best hospitals, it also holds one of the most known and largest biotech companies, Biogen ($BIIB) 

Company Overview 

Biogen, which trades with the ticker symbol ($BIIB), specializes in the field of neuroscience. According to their investor section on their website, the company “discovers, develops, and delivers worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases.” Their triple D, discover, develop and deliver, has been in action since its founding in 1978 by “Charles Weissmann, Heinz Schaller, Kenneth Murray, and Nobel Prize winners Walter Gilbert and Phillip Sharp.” 

The company currently dominates within the field of medicines which treat multiple sclerosis. Along with multiple sclerosis, Biogen also treats many diseases found in older patients such as Parkinson and Alzheimer’s disease, which is growing into a larger revenue stream. With its prior success in treatments, Biogen is actively evolving their strategies and states the company “is focused on advancing research programs.” 

Financials

Due to the COVID-19, many companies have suffered at the hand of closings and a lack of consumer buying. These closings have not affected the goal, and larger, the revenue of Biogen. Within their most recent quarterly earnings, the company stated: “To date, we and our collaboration partners have been able to continue to supply our products to our patients worldwide and currently do not anticipate any interruptions in supply.” Biogen expressed that new developments in COVID-19 could disrupt the company from a larger whole, but expressed later in the report, “We and our third-party contract manufacturing partners continue to operate our manufacturing facilities at or near-normal levels.”

Aside from COVID-19, Biogen has been growing its revenue on-trend for the past four years. In the company’s 2019 annual report, revenue from 2018 to 2019, saw a 4.5% increase and a 35% increase from 2015 to 2019. Along with revenue, the company has seen a drastic jump in its cash flow, from 3.9B in 2018, to 6.2B in 2019. From a small look into the company’s financials, Biogen is an attractive buy from a financial standpoint. 

Stock Price

As of June 25th, Biogen’s stock currently sits at a price of $271, under the ticker symbol (BIIB). Over the course of the year, the stock, compared to the broader market, is down 7%. Although the stock is down for the year, Biogen, from a charting perspective, remains neutral. The nearest support remains at the $260 price level, which it most recently tested and held. If BIIB continues to hold this support in the near future, the stock could return to the $300 mark, representing a +10% price increase. 

If Biogen’s stock continues to fall, and possibly through the $260 price level, the nearest support or buy level is at $225. Although unlikely, at $225, Biogen is considered a strong buy. 

Tecfidera Drug Patent Loss

On June 19th, a West Virginia court ruled that Biogen’s Tecfidera patent was invalid and that Mylan, a global generic company within the field of pharmaceuticals, could produce Tecfidera. This news subsequently led to a 7% drop in Biogen’s stock price. Although, investors seemed to shrug off some of the news on Friday, June 19th, as the stock rose 4%. 

Tecfidera, Biogen’s multiple sclerosis drug, accounted for 4.43 billion, or roughly 20% of the company’s revenue in 2019. With the most recent court decision, Biogen will likely see a more significant fall in its revenue for 2020. 

Biogen’s Future Outlook

Biogen has and will continue to be a lead producer in the pharmaceutical manufacturing industry. Within the 2019 annual report, the company expressed that the future remains bright for Biogen. In their “Growing our multi-franchise portfolio,” the company added ophthalmology, lupus, stroke, and Alzheimer’s disease to their growing list of opportunities for drugs in the early 2020s. With these possible new streams of revenue in the 2020s, the company’s loss of its Tecfidera drug remains a smaller issue for long term investors. 

Along with the expansion into other possible treatments, Biogen reported “continued growth and regional expansion in spinal muscular atrophy.” SPINRAZA, a treatment approved for infants, children, and adults, has shown continued growth within the United States and abroad. In 2019, the company saw an increase in revenue from SPINRAZA from “22% in 2018 to $2.1 billion, driven by 9% growth in the U.S. to $933 million and 34% growth outside the U.S. to $1.2 billion.” With SPINRAZA growing in popularity, the treatment could become a prominent leader within the company’s product revenues and could potentially cut the revenue loss of Tecfidera.

The company has also expressed the growing demand for treatments regarding neuroscience. According to Biogen, “the global population over the age of 60 will be nearly 1.5 billion by 2030.” With dementia and Parkinson’s disease being prominent in the older generation, the company, within its CEO letter, can “capture the neuroscience opportunity.

Analyst Rating…

Biogen can be considered one of the most impressive biotech companies in the world and will continue to be for the foreseeable future. The company continues to grow its revenue through its many selection of products, and will likely continue due to the growing older population. 

Aside from the company itself, Biogen’s location in Boston creates an opportunity to funnel many graduates from Harvard and MIT to work for the company. 

Biogen’s triple D, discover, develop and deliver, will always be the company’s focus in the future and that is why the company is a BUY. 

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