Biotech Investing

March has been a busy month for Biogen with its voluntary withdrawal of Zinbryta and its acquisition of Pfizer’s PF-04958242.

One might think that making the decision to withdraw worldwide market authorization for a drug would negatively impact a company  but not for Biogen (NASDAQ:BIIB). Albeit unrelated, the company also announced a planned drug acquisition within a two week span.

The voluntary withdrawal of Zinbryta, a treatment for relapsing multiple sclerosis that the company developed with Abbvie (NYSE:ABBV) was announced in early March, which was taken off the market because the complex and evolving benefits or risks of the drug isn’t possible with the limited number of patients being treated.

“Biogen believes the voluntary worldwide withdrawal of ZINBRYTA, a treatment for relapsing multiple sclerosis, is in the best interest of patients,” Alfred Sandrock, executive vice president and chief medical officer at Biogen said in the release. “Biogen and AbbVie continue to prioritize patient safety and the care of multiple sclerosis patients worldwide.”

According to Biogen’s financial report for 2017, the company made $53 million in with the drug, which was a 98 percent increase year over year for the fourth quarter.

While Biogen’s voluntary withdrawal may have disappointed its investors, the company announced on Monday (March 12) its plans to expand its portfolio with a new acquisition plan of Pfizer’s (NYSE:PFE) phase 2b-ready asset, PF-04958242, for cognitive impairment associated with schizophrenia, in a $590 million deal. The deal is expected to close in the second half of this year.

Biogen intends to begin the phase 2b trial in the second half of 2018. Over 20 million people worldwide have schizophrenia. With the majority living with a degree of cognitive impairment from the disease, it’s increasingly the most recognized unmet need from effective schizophrenia treatment.

“As pioneers in neuroscience, Biogen continues to explore new ways to treat serious diseases where there are few or no options, such as CIAS,” Michel Vounatsos, CEO of Biogen said in the release. “Given the significant unmet patient need and Biogen’s ability to apply its scientific expertise in this area, we are enthusiastic to advance development of this asset as we continue to expand our neuroscience pipeline, including in our emerging growth areas such as neuropsychiatry.”

Investor Takeaway

Despite the company’s announcements, neither changed Biogen’s share price very much– for better or for worse. Following the voluntary withdrawal, Biogen’s stock price increased by 1.19 percent to $286.87. Two analysts reiterated “buy” and “hold” ratings  March 2, Guggenheim analyst Adnan Butt gave the company a $400 price target with a “buy” rating. Whereas RBC Capital analyst Brian Abrahams reiterated a “hold” rating with a price target of $330.

Since the Pfizer drug acquisition announcement, Biogen’s share price decreased by less than one percent to close at $285.72 on Wednesday (March 14). Two analysts reiterated their “buy” ratings Monday, Credit Suisse analyst and Salim Syed issued price targets of $384 and $433, respectively.

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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.



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