Analysts Digest Biogen's Alzheimer's Disappointment: 'There Isn't Much To Be Excited About'

Biogen Inc BIIB shares plunged nearly 30 percent Thursday after, along with development partner Eisai Co., Ltd ESALY announced the decision to scrap two late-stage trials evaluating their Alzheimer's candidate aducanumab.

The Analysts

Mizuho Securities analyst Salim Syed downgraded Biogen from Buy to Neutral and slashed the price target from $416 to $235.

UBS analyst Carter Gould downgraded Biogen from Buy to Neutral and reduced the price target from $395 to $242.

Morgan Stanley analyst Matthew Harrison downgraded shares from Overweight to Underweight and slashed the price target from $401 to $210.

Biogen shares were sinking further under the weight of sell-side downgrades. At time of publication, shares were down 3.4 percent to $219.23.

Mizuho: We Don't See Much To Be Excited About

Syed said in a note that given the now-dead beta-amyloid hypothesis, the two remaining Alzheimer's pipeline drugs – E2609 and BAN2401 – need to be taken out of the model.

Biogen's remaining pipeline, according to the analyst, is worth a risk-adjusted $20 per share on a DCF basis, driven by late-stage assets ALK8700 for multiple sclerosis, BIIB093 for large hemispheric infraction and NSR-REP1 for choroidermia and BIIB067 for ALS.

Delving on Biogen's base pipeline, the analyst said it consists of: multiple sclerosis, which accounts for two-thirds of its revenues but is seeing slightly declining growth; and Spinraza, which has looming competition from Novartis AG NVS's gene therapy as well as the oral spinal muscular dystrophy drugs.

"The most important next catalyst is Tecfidera US litigation outcome about 12 months from now," Syed wrote in a note.

See Also: Eisai Launches Confirmatory Late-Stage Trial Of Second Alzheimer's Asset After Setback

UBS: Visibility Into Path Back To Top-line Growth Impaired

Biogen investors have in the past showed willingness to look past the threats to its base business, given the promise offered by its Alzheimer's pipeline, Gould said.

Given the base pipeline risks and the removal of Alzheimer's from the model, the analyst said investors are likely to focus intensively on Biogen escalating its M&A pace. That said, the analyst is skeptical M&A will emerge as a positive catalyst in the near term.

Notwithstanding the opportunities presented by some of the pipeline assets, particularly PSP, ALS and stroke, Biogen shares may not get the benefit of the doubt for the assets ahead of data in the wake of the Alzheimer's R&D setback and the high-risk nature of R&D in neuroscience, Gould added.

Morgan Stanley: We Don't Expect Near-Term Recovery

A near-term recovery in Biogen is ruled out, given the lack of clear near-to-midterm upside driver and downside risks related to Spinraza competition, limited pipeline news flow and Tecfidera patent risks, Morgan Stanley's Harrison said.

The analyst doesn't see any lift from operational measures such as cost controls.

Posted In: AducanumabAlzheimer's diseaseCarter GouldMatthew HarrisonMizuho SecuritiesMorgan StanleySalim SyedUBSAnalyst ColorShort IdeasDowngradesPrice TargetTop StoriesAnalyst RatingsTrading Ideas

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.