Biogen Inc. (NASDAQ: BIIB)
Biogen, founded in 1978, is one of the older biotech companies. It focuses on fighting neurological disorders and has a diverse portfolio. Biogen Inc. is an American multinational biotechnology company based in Cambridge, Massachusetts, specializing in the discovery, development, and delivery of therapies for the treatment of diseases to patients worldwide. Given its recent success with its new Alzheimer’s drug, lencanemab, the company has seen an increase in mentions by a massive 300% over the last day, encouraging investors to wonder whether its a good time to take a position in the company now. Currently, shares of Biogen trade at $261.28 each.
There are numerous reasons why Biogen has generated so much positive hype of the last day, here are some of them.
Biogen and its partner, Eisai, reported positive top-line results from a phase 3 clinical study for its experimental Alzheimer’s drug, lecanemab. Studies found that it slowed the progress of the disease by 27% compared with a placebo in a large trial of patients in the early stages of the disease.
While revenue in the second quarter was a reported $2.589 billion, down 6% year over year, the company had EPS of $7.24, compared to EPS of $2.99 in the same period in 2021.
It now expects annual revenue of between $9.9 billion and $10.1 billion, up from an earlier range of $9.7 billion to $10 billion.
The company has also raised non-GAAP (adjusted) EPS from $14.25 to $16.00 to an estimate of $15.25 to $16.75.
Its trailing price-to-earnings (P/E) ratio is 19, which is right around the market average, which doesn’t include any future earnings that come from this new Alzheimer's drug, which could drive earnings growth for many years if or when it eventually comes out to the public.
No investments are 100% flawless, and Biogen wouldn’t be an exception. Here are some reasons why it might not be the best time to invest in the company.
In the second quarter, the drugmaker's top line declined by about 7% year over year to $2.6 billion.
In the unlikely event that lecanemab fails to earn approval, Biogen will be in trouble. However, with an estimated 6 million Americans affected by Alzheimer's, and given how devastating the effects can be, Biogen will likely be able to charge a lot of money for this drug if it can actually slow down the spread. Additionally, it is known for its other drugs too which could compensate if this is the case. Therefore, with this new information, it might be worth considering taking a position in the company now.
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