"Biogen needs AVXL more than AVXL needs Biogen"
I forgot which poster stated this but here is a portion of an article written by Todd Campbell in The Motley Fool.
Despite outperforming expectations, year-over-year top-line growth remained tepid compared to the company's historical rates, and a decision by management to shelve development of a next-generation multiple sclerosis (MS) therapy marked a second failure of a key pipeline candidate this year.
In June, the company reported disappointing mid-stage results for anti-lingo, a therapy it hoped could restore the damage to a nerve's myelin sheath that causes MS symptoms. Then in its conference call with investors in October, Biogen announced it's abandoning MT-1303, a S1P modulator that Biogen once hoped could insulate itself against fast-approaching competition from Celgene and Novartis , two companies developing their own S1P drugs. After reviewing MT-1303's market potential, Biogen is walking away from MT-1303 only a year after securing the rights to it from Mitsubishi Tanabe .
Michael D. Ehlers, executive VP of research and development, said, "As we looked at how the landscape was evolving, both in terms of the regulatory competitive landscape, changing features there, and the corresponding fit with our strategic priorities about where we could best allocate resources based on our own expertise and competency -- we just determined that it wasn't as good of a fit as other things which we could allocate our resources toward."
Now what
Biogen is the dominant player in MS treatment, and that's not going to change overnight. However, new drugs are on the horizon that could eat away at Biogen's market share over the next few years, so investors are right to be concerned about Biogen's R&D stumbles.
Management isn't giving up on MS, but it is shifting a lot of R&D focus to other indications, including Alzheimer's disease. If that R&D pays off, then management could tap into a massive and underserved market. However, this research is still ongoing, and it could be a while before we learn how effective these "moonshots" are at curbing disease.
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Why Biogen Inc. Stock Lost 10.5% of Its Value In October
November 09, 2016, 08:03:00 AM EDT By Todd Campbell, Motley Fool
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