Summary
- Biogen has seen a huge setback in its pipeline as its Alzheimer's candidate has flunked.
- Despite the setback, I believe the risk-reward has changed for the good at just 8 times earnings as the company has no real leverage, despite issues with the pipeline.
- I like the risk-reward situation at this level, meaning that I have started to buy the dip.
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Just two weeks ago I looked at Biogen (BIIB) as it was "adding to the pipeline" with the acquisition of Nightstar Therapeutics (NITE) in an $800 million deal. That news was just noise in the devastating news which Biogen has seen in its pipeline, warranting an update on the investment case.
The investments being made in Nightstar were "neutralised" a few days later as the company sold its biologics manufacturing facility in Denmark in a deal which brings in $890 million in cash. The issue, however, is the blow to the pipeline as the Alzheimer's potential franchise no longer seems a viable route, as Alzheimer's remains a devastating condition for those affected by it, and those trying to develop a medication against it, including Biogen.
