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Reassuring Data Boosts Our Biogen Valuation

Details on Alzheimer's drug candidate are encouraging, but uncertainty remains.


Biogen (BIIB) presented additional phase 3 data for Alzheimer’s disease drug candidate aducanumab at the Clinical Trials on Alzheimer’s Disease meeting on Dec. 5, and we’ve raised our fair value estimate to $390 per share from $383 following what we view as reassuring details.

Biogen still plans to file for Food and Drug Administration approval of aducanumab in early 2020 based on full data from its two phase 3 studies: Engage and Emerge. We’ve increased our assumed probability of approval for aducanumab to 40% from 30% and now incorporate sales of nearly $3 billion (nearly $7 billion if approved) by year 10 of our model. While this update was encouraging, we’re still uncertain about whether the FDA will see the weaker Engage trial as confirming the benefit seen in the Emerge study. We continue to award Biogen a wide economic moat rating based on the stability of its multiple sclerosis franchise, diversification in neurology with Spinraza, and a solid neurology pipeline, although we highlight the high fair value uncertainty that comes from having an innovative, high-risk pipeline.

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

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