Key guidance expected for biotech trust favourite Biogen
Biogen, the neurology-focused US biotech giant and a key holding for several of the UK’s sector specialist investment trusts, will provide a closely-watched update for investors at next week’s JP Morgan Healthcare conference that could be critical to its 2018 outlook. Biogen’s CEO will present at the conference, the largest and most important investor event in the biotech industry, on January 8th at 2:30 pm PST (10.30pm GMT), which will be webcast live.
Analysts are looking for the company to provide explanatory “colour” on two important investment themes: the trajectory of its already highly successful launch of Spinraza for treating spinal muscular atrophy and the degree to which it holding share in the multiple sclerosis market in the face of increasing competition.
Biogen is the largest holding for both Biotech Growth Trust (BIOG), representing 13% of its NAV, and International Biotech Trust (IBT), accounting for 7.5% of NAV. The company is the third largest component of the Nasdaq Biotechnology Index, with a weighting of 7.8%, so for the first of these two trusts, it represents a substantial overweight position.
US sell-side analysts are, however, broadly bullish stance on the stock, expecting the company’s commercial franchise to provide mid-single digit top- and bottom-line growth over the next few years, driven by Spinraza and later on biosimilars (generic versions of biological drugs) via its Samsung Bioepsis joint venture.
However, key questions remain including how well Biogen will be able to maintain its current position in the $21bn global MS market, particularly in the face of intense competition from Roche’s Ocrevus. Analysts were wrong-footed twice in the fourth quarter by surprisingly downbeat updates from Celgene and Gilead in what might be considered similarly competitive market segments (respectively psoriasis and hepatitis C), suggesting that US healthcare providers have become more aggressive in obtaining discounts for formulary access.
Last year Biogen has signed an expensive deal with Forward Pharma to reduce IP risk for its flagship MS product Tecfidera and later licensed rights to a follow-up product under development by Alkermes coded ALKS8700. However, the latter deal has yet to feature in its official financial guidance.
Biogen is also one of the leading players in the development of new Alzheimer’s therapies. It recently suffered something of a setback with a so-so 12 month read-out from a phase II study of BAN2401. It had been hoped an early positive result would shore up the so-called beta-amyloid hypothesis, on which its later-stage products also depend. Biogen has made an ~$2bn bet on the outcome of two large Phase III studies with its beta amyloid antibody aducanumab in Alzheimer’s disease; but these studies do not read out until at least 2020.
Critial questions on the aducanumab studies include whether there will be an interim efficacy analysis, whether the titration protocol will reduce the number of ARIA cases and whether APOE-ε4 patients’ higher discontinuation rate due to ARIA could be a confounding factor in evaluating clinical benefit.
Although Biogen’s stock is off a 52-week high of $344 reached in October, it rose by 18% over 2017 to close out the year at $318.
Key guidance expected from biotech trust favourite Biogen