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Biogen Remains a Wide-Moat Neurology Innovator

Even after recent failed drug trials, we think the company’s undervalued.

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We lowered our  Biogen (BIIB) fair value estimate to $327 per share from $385 following the news that both phase 3 trials of Alzheimer’s drug aducanumab are being discontinued due to futility. We had previously assigned the drug a 60% probability of approval based on strong data in a smaller trial and the drug’s differentiation from other failed amyloid antibodies. While there is a still a chance that these drugs could work in the preventive setting, we are removing all amyloid antibody revenue forecasts (including BAN2401, which had mixed data in 2018 and had an uncertain path forward into pivotal trials) from our model.

The valuation impact was partly countered by our inclusion of the pending acquisition of Nightstar, which brings two ophthalmology gene therapy drugs into Biogen’s pipeline. We have removed aducanumab and BAN2401 from our valuation and had already removed elenbecestat (still in phase 3) from our model. We do continue to include a 25% probability of approval for tau antibody BIIB092 in supranuclear palsy.

Karen Andersen does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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