Is Biogen Stock a Buy Right Now? This Is What You Need to Know

There’s a new FDA approved drug in town and an unexpected one at that. Going into Monday’s PDUFA date for aducanumab, Biogen’s (BIIB) Alzheimer’s disease drug, the general view on Wall Street was that the treatment’s chances of making it pass the regulators were pretty slim.

In the end, however, the FDA sprung a surprise and gave the much-needed therapy its seal of approval. The importance of the occasion should not be taken lightly, says Cowen’s Phil Nadeau, who calls the approval of aducanumab – or its intended brand name Aduhelm – a “major milestone for Biogen, Alzheimer’s research, and patients with Alzheimer’s disease.” Like many, heading into the big decision day, Nadeau was pessimistic.

“Following November’s negative Ad. Com., we had been skeptical that approval was possible,” the 5-star analyst admitted. “Though it was clear the FDA reviewers wanted to approve Aduhelm, there did not seem to be a viable path since November’s Ad. Com had concluded that clinical efficacy had not been established. However, proving once again that when there is a will there is a way, the FDA has granted accelerated approval to Aduhelm based on its ability to reduce beta amyloid levels in the brain.”

Since 2003, the FDA had not authorized any new Alzheimer’s therapies, and Biogen’s is the first approved treatment which targets the underlying causes of Alzheimer’s, instead of just treating symptoms of the disease.

While the FDA acknowledged the advisory committee’s negative opinion and controversies surrounding the drug’s filing, in the end, the regulatory body decided that the treatment’s benefits outweighed the risks. The FDA also noted Aduhelm reduced the level of amyloid plaques in a consistent and convincing manner, which is “reasonably likely to predict clinical benefit.”

However, to confirm Aduhelm is clinically beneficial, Biogen must conduct a post-approval clinical trial, and if the drug fails to impress, the FDA will have the option to take the therapy off the market.

Aduhelm caters to a major unmet need and market opportunity, as there are over 6 million sufferers of Alzheimer’s disease in the U.S. It is also set to be a hefty revenue generator – all in all, the drug will cost $56,000 a year.

Following the positive verdict, Nadeau upgraded Biogen’s rating from Market Perform to Outperform, and raised the price target from $225 to $450. The new target could yield investors returns of 8.5%. (To watch Nadeau’s track record, click here)

Despite the approval, not all on Wall Street are quite as exuberant. Based on 11 Buys and Holds, each, the analyst consensus rates the stock a Moderate Buy. The analysts expect the share price to stay rang-bound in the coming months, given the average price target currently stands at $412.90. (See BIIB stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.