Summary
- Biogen recently announced that it will begin FDA approval on its Alzheimer's disease drug aducanumab in the third quarter 2020.
- The company experienced a setback in working with the FDA on the data submission due to COVID-19.
- Biogen also recently lost a patent dispute with rival company Mylan, meaning that generic forms of its top-selling Multiple Sclerosis medication Tecfidera may be forthcoming.
- This article focuses on the fundamentals and what the real value is versus the current share price.
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Pharmaceutical company Biogen, Inc. (BIIB) faces some hurdles as the second half of 2020 begins. The company recently lost a patent dispute with competitor Mylan, which means that generic forms of its top-selling multiple sclerosis drug Tecfidera may be coming into the market soon. Biogen has previously been able to defend its patents several times and will likely appeal the ruling. The company derives 40% of its income from Tecfidera sales.
Biogen also experienced setback with its new Alzheimer's disease drug, aducanumab. In March of last year, the company suspended its phase-3 trials of the drug because the trials were not predicted to reach their primary endpoint. The stance was reversed in October and Biogen planned to file for FDA approval early in 2020. While it had been working with the FDA on data submission, complications due to the spread of COVID-19 hindered the process. Biogen now seeks to file in the third quarter of 2020. While Alzheimer's doctors do not feel that the drug should be approved, they have stated they would prescribe aducanumab if it passes and gains approval.
While current news stories, good or bad can sway our opinion about investing in a company, it's good to analyze the fundamentals of the company and to see where it's been in the past and in which direction it's heading.
This article will focus on the long-term fundamentals of the company, which tend to give us a better picture of the company as a viable investment. I also analyze the value of the company versus the price and help you to determine if BIIB is currently trading at a bargain price. I provide various situations that help estimate the company's future returns. In closing, I will tell you my personal opinion about whether I'm interested in taking a position in this company and why.
Snapshot of the Company
A fast way for me to get an overall understanding of the condition of the business is to use the BTMA Stock Analyzer's company rating score. It shows a score of around 89/100. Therefore, Biogen is considered to be a good company to invest in, since 70 is the lowest good company score. BIIB has high scores for 10 Year Price Per Share, ROE, Earnings per share, Ability to Recover from a Market Crash or Downturn, ROIC, and Gross Margin Percent. It has low a score for PEG Ratio. A low PEG Ratio score indicates that the company may not be experiencing high growth consistently over the past 5 years. In summary, these findings show us that BIIB seems to have above-average fundamentals since the majority of categories produce good scores.
Before jumping to conclusions, we'll have to look closer into individual categories to see what's going on.
(Source: BTMA Stock Analyzer )
Fundamentals
Let's examine the price per share history first. In the chart below, we can see that price per share had been increasing consistently until 2015. Then, after that point, the share price has been lackluster and mostly stagnant. Click here to enter text. Overall, share price average has grown by about 231.2% over the past 10 years or a Compound Annual Growth Rate of 14.23%.
(Source: BTMA Stock Analyzer - Price Per Share History)
Earnings
Looking closer at earnings history, we see that earnings have been on a gradual incline throughout the past 10 years except for a hiccup in 2017.
Consistent earnings make it easier to accurately estimate the future growth and value of the company. So, in this regard, BIIB is a good candidate of a stock to accurately estimate future growth or current value.
