Summary
- Biogen made a nice bolt-on deal to boost its pipeline with the purchase of Nightstar Therapeutics.
- I like such moves being made by the business as real pipeline build-out and conversion are needed given the still large reliance on the MS franchise.
- Shares look cheap, as investors undoubtedly price in some profit and sales decline post-2019, with growth coming to a standstill already.
- I see value at these levels but are in no rush to pick up a large position just yet at these levels.
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Biogen (BIIB) made its small contribution to the M&A party which is happening in the wider pharma and biotechnology sector. Early March, the company announced the purchase of Nightstar Therapeutics (NITE) in a deal which can be labelled as bolt-on transaction with a value of $800 million.
The deal makes sense to bolster the pipeline as real pipeline conversion is needed with many research programs focusing on "risky" trajectories as real replacement of revenues is needed at it seems that MS sales have certainly leveled off and might be coming down. Nonetheless, a very clean balance sheet and modest valuation multiple provide some real comfort at these levels, yet I am in no rush to buy just yet.
