Morningstar | Aducanumab's Failure Weighs on Our Biogen FVE; Firm Remains a Wide-Moat Neurology Innovator
We plan to lower our $385 fair value estimate for Biogen following the news that both phase 3 trials of Alzheimer's drug aducanumab, Engage and Emerge, 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. We expect this action to lower our fair value estimate by 15%-20%, but we're also rolling our model and incorporating the pending Nightstar acquisition, which could modestly sway our valuation from this range.We continue to believe that Biogen's neurology portfolio and pipeline warrant a wide moat rating, as the firm's pipeline is seeing significant progress beyond Alzheimer's in markets like multiple sclerosis (two midstage remyelinating agents), amyotrophic lateral sclerosis (entering pivotal trial), Parkinson's (phase 2), stroke (phase 3), and pain (entering phase 3 in trigeminal neuralgia). These programs counter the expected pressure from Tecfidera generics (which we now model in 2021 in the United States) and Spinraza competition (Novartis' Zolgensma on track for Food and Drug Administration approval in type 1 spinal muscular atrophy in May).
Biogen should see 2019 catalysts for Vumerity (MS approval and head-to-head data on gastrointestinal tolerability versus Tecfidera), Tysabri (epilepsy data), and tau antibody BIIB092 (data in progressive supranuclear palsy). For a detailed analysis of Biogen's top-line growth prospects and pipeline candidates, please see our Healthcare Observer, "Annual Drug Pipeline Report: Moats Remain Secure as Innovation Counters Pricing and Generic Headwinds, but M&A Accelerating."
Biogen is a biopharmaceutical company focused on discovering, developing and delivering therapies for people living with neurological and neurodegenerative diseases as well as related therapeutic adjacencies. The company's main growth areas include multiple sclerosis (MS) and neuroimmunology; Alzheimer's disease and dementia; neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis; movement disorders, including Parkinson's disease; and ophthalmology. The company's marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, VUMERITY and FAMPYRA for the treatment of MS, SPINRAZA for the treatment of SMA and FUMADERM for the treatment of severe plaque psoriasis.
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