Market Overview

Piper Jaffray On Biogen Downgrade: '6 MG Data Does Not Inspire Confidence…Even More Speculative Than Before'

Share:

In a report published Wednesday, Piper Jaffray analyst Joshua Schimmer downgraded shares of Biogen Inc (NASDAQ: BIIB) to Neutral from Buy with a price target lowered to $410 from a previous $485 following the company's results for the 6mg Aducanumab arm in its P2 study for Alzheimer's.

Schimmer commented that Biogen's results were "sloppy" and "we do not believe this is an attractive pipeline program." The analyst added that expectations for the company's base business and pipeline are "deteriorating."

"As Biogen plans to move forward, potentially at the 6 mg/kg dose, Biogen may be sacrificing potential efficacy for limited or no improvement in safety," Schimmer wrote. "This dataset is far from inspiring confidence and in our view is even more speculative than before.

Related Link: Disappointing Drug News Sends Biogen And XOMA Shares Down

Schimmer continued that Biogen is now in a position where it has to make an "aggressive" acquisition to restore investors' confidence in its long-term growth abilities. However, unlike Celgene Corporation (NASDAQ: CELG) and Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN) who pursued M&A activity from a "place strength," Biogen will be forced to pursue M&A activity from a "place of weakness" and "one done out of need as opposed to opportunity." The analyst argued that unlike Gilead Sciences, Inc. (NASDAQ: GILD), Biogen doesn't have a "track record" of successfully dealing in large-scale M&A activity.

"We aren't ready to give them the benefit of the doubt," Schimmer argued. "We will reconsider if and when the time comes."

Schimmer also noted that Wednesday's data release reinforces his "generally skeptical" views for amyloid as a target in Alzheimer's. As such, the next meaningful catalyst for the stock is its earnings report later this week. At that time, analysts will likely begin lowering their outer-year Tecfidera estimates given the "challenges of the franchise," the recent surge in Gilenya scrips, and Celgene "entering the fray" following its acquisition of Receptos Inc (NASDAQ: RCPT).

Bottom line, the analyst's downgrade and lower price target reflects a lower Tecfidera estimate, higher operating expenses to reflect the company's need to continue investing in its pipeline, and lower terminal growth (revised to 3.5 percent from 4.5 percent) of Tecfidera.

Latest Ratings for BIIB

DateFirmActionFromTo
Oct 2019MaintainsMarket Perform
Oct 2019MaintainsHold
Oct 2019MaintainsUnderperform

View More Analyst Ratings for BIIB
View the Latest Analyst Ratings

Posted-In: Aducanumab alzheimer's Joshua Schimmer PiperJaffrayAnalyst Color Downgrades Price Target Analyst Ratings

 

Related Articles (BIIB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
IRBTPiper JaffrayReiterates51.0
KMBMorgan StanleyMaintains139.0
SNAPNomuraMaintains16.0
DFSCredit SuisseMaintains99.0
UPSCredit SuisseMaintains118.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

New Age Electronics Announces Distribution Agreement With KEF

CAT Goes Splat After 8-K Release