Morgan Stanley Adjusts Their View Of Biogen After Spin-Off

Biogen Inc BIIB published a Form 10 for its hemophilia spin-off, Bioverativ. Morgan Stanley’s Matthew Harrison maintained an Overweight rating on the company, while reducing the price target from $385 to $368. The analyst revised the Biogen model to remove Hemophilia estimates from 2017 onwards.

Updates To The Model

Biogen’s spin-off of its hemophilia assets is expected to be completed in early 2017. Analyst Harrison mentioned the following updates to the Biogen model:

• All hemophilia costs and revenues after 2016 have been removed. Consequently, the revenue estimates for 2017 and 2018 have been reduced by 7.3 percent and 7.4 percent, respectively.
• The SG&A and R&D estimates for both 2017 and 2018 have both been reduced by 6.3 percent. These expenses have been reduced for 2017 onward by two-third of the total Bioverativ spending, which is $225 million for SG&A and $200 million for R&D, assuming some dis-synergies of the split.
• The tax rate in 2017 and beyond has been reduced by 1 percent to reflect that the hemophilia assets carry a full statutory US tax rate, since the IP is US domiciled.

“We also updated our hemophilia revenue ramps to better reflect competitor timelines to the market and the slope of the European launches which just began in early 2016,” Harrison wrote.

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