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Biogen: Alzheimer’s Treatment Could Be a Great Success
Stock Analysis & Ideas

Biogen: Alzheimer’s Treatment Could Be a Great Success

Biogen (BIIB) had a disappointing performance recently, dropping more than 35% over the last six months, in line with the healthcare sector.

Biogen is a drugmaker working on innovative therapies to treat people with serious neurological diseases such as multiple sclerosis and Alzheimer’s.

The study of potential factors that trigger cognitive impairment has led to some scientific breakthroughs that could bring a breath of fresh air to Biogen’s portfolio, as its treatments seem a little lazy from a profitability standpoint. This leads to a hopeful bullish stance on this stock.

Q4 Earnings

Biogen reported lower revenue and lower pro forma earnings per share for the fourth quarter of 2021 compared to the fourth quarter of 2020 due to headwinds from biosimilar competition and generic market participants coupled with unpredictable market barriers.

Non-GAAP earnings per share came in at $3.39 (down 26% year-over-year) on sales of $2.74 billion (down 4% year-over-year). However, the first beat the median consensus estimate by $0.02, while the second beat the analyst estimates by $112.5 million.

Looking Ahead

Looking ahead to full-year 2022, the company is targeting revenue in the range of $9.7 billion to $10 billion, while analysts are forecasting an average of $9.9 billion. Earnings per share are expected to be in the range of $14.25 to $16 compared to the median consensus estimate of $15.4.

Alzheimer’s: The Source of Biogen’s Success

Looking at how Biogen’s stock price has performed, one can’t help but appreciate the importance the market placed on each move by Aduhelm (Biogen’s Alzheimer’s treatment) in the run-up to FDA regulatory approval.

Following U.S. regulatory approval on June 7, Biogen’s stock price skyrocketed within days, as the market knew fully well that the next step would be the post-marketing study to validate the benefits of the treatment of Biogen in Alzheimer’s patients, the beginning of a sea of growth opportunities.

Indeed, the pandemic may have created one of those, a huge opportunity that’s just around the corner.

Among the many people who said they couldn’t mentally cope with the stress of lockdown and other restrictions, many were later diagnosed with at least one mental disorder. So, their depression actually had nothing to do with being temporarily restricted from going out or socializing with the rest of the community. Rather, it was a mental disorder brought to light by the pandemic.

A recent University of Michigan study published in JAMA Psychiatry suggests that mental disorders could open the doors to severe forms of cognitive brain decline and Alzheimer’s over the years. If this is true, then COVID-19 has unearthed an army of potential patients who would otherwise remain undetected by the healthcare system. 

Alzheimer’s and other cognitive impairments are on the rise in modern society. According to the IHME Global Burden of Disease, at least 13% of the world’s population carries the trigger. 

However, if the public health emergency has suggested that the percentage of people at risk of Alzheimer’s could be much higher, Biogen’s product may have more therapeutic areas than originally thought, given its use not only as a cure but also as a preventative treatment.

Wall Street’s Take

In the past three months, 28 Wall Street analysts have issued a 12-month price target for BIIB. The company has a Moderate Buy consensus rating, based on 13 Buys, 15 Holds, and zero Sell ratings.

The average Biogen price target is $262.63, implying 25.2% upside potential.

Conclusion

Except when the market had to react to some major news about Biogen’s development of its treatment for Alzheimer’s disease, the stock has disappointed. This means Aduhelm is crucial to Biogen’s success. Social issues emerging in days of the COVID-19 pandemic suggest Alzheimer’s needs more attention than previously thought as many more people could be carrying the trigger.

So there’s an incredible growth opportunity for the company’s drug, “the first FDA-approved drug for Alzheimer’s disease in almost 20 years,” says Biogen.

Read full Disclaimer & Disclosure

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