Biogen buys major biotechnology pump? A drug that was once thought of as dead could be emerging from the ashes.

Do Biogen's shocking news make the stock a buy in now?

Biogen (NASDAQ: BIIB) has been bankrupt for much of 2019. The action plummeted in March after the company stopped two late-stage clinical studies evaluating aducanumab in the treatment of Alzheimer's disease. But that wasn't the end of the story.

The company shocked the world of biotechnology on Tuesday by announcing plans to seek U.S. regulatory approval of aducanumab. Biogen's share price soared with news that the Alzheimer's drug was emerging from the ashes as the mythological phoenix. Is Biogen now a stock to buy after the biggest biotech pump in years?

Biogen buys major biotechnology pump

A bona fide biotech bomb

Make no mistake, Biogen's decision to seek aducanumab approval is definitely the biggest biotech pump in a long time. It is important to understand two things about this remarkable story: the promise of aducanumab and the apparent purpose of apparent clinical failure earlier this year.

Just two years ago, market researcher EvaluatePharma ranked aducanumab as the # 1 most valuable pipeline asset in the entire biopharmaceutical industry. Some industry observers have predicted that the drug may reach maximum annual sales of about $ 20 billion if approved.

This kind of praise suggested that aducanumab could be one of the most successful drugs in history. And for good reason. Alzheimer's is a terrible disease for which effective treatments have been difficult to develop. The landscape is virtually filled with the once-promising and failed Alzheimer's drugs.

At the beginning of 2019, it seemed that aducanumab was another failure. An independent data monitoring committee reported that the drug was not likely to reach the primary endpoints in two late-stage clinical studies. Biogen discontinued both studies and rejected a phase 2 study of aducanumab and a long-term extension of a phase 1b study to the drug.

Almost all had given up on aducanumab. What may have been one of the best-selling drugs of all time seemed to have been ruled out justified because it didn't work. But the shocking announcement from Biogen on Tuesday has changed everything.

Biotechnology said its decision to submit aducanumab for Food and Drug Administration approval in early 2020 was based on a new analysis of a larger data set of its two studies in late stage which were suspended earlier this year. Biogen said the new analysis showed that the drug reduced amyloid levels in the brain and reduced clinical deterioration. The company, meanwhile, plans to offer aducanumab to eligible patients who have previously enrolled in its drug studies.

Biogen's two futures

It's hard to overstate how much aducanumab changes Biogen's outlook. Without the Alzheimer's disease drug, the company faces some great challenges.

The Biogen Multiple Sclerosis (MS) franchise has long been a major driver of growth. But sales of their MS medicines are now basically stable as new competition has entered the market. Biogen receives royalties from Roche's newest serious rival, Ocrevus de Roche, but not enough to make up for the lower sales of its own MS drugs.

With its water-treading MS franchise, Biogen has relied heavily on Spinraza for Spinal Muscular Atrophy (AME). Sales of SMAs continue to grow, but at a slower pace than in the past. The biosimilars of the company are generating some growth, although the impact on the general income is not great.

Biogen's future growth prospects are highly dependent on its portfolio. Excluding aducanumab, the company has five late-stage candidates. One of them, BIIB098, is awaiting FDA approval. However, even if you get approval, the drug is likely to take away market share from Biogen's current leading diabetes drug, Tecfidera. None of the other advanced biotech candidates has almost the aducanumab market potential.

With the possibility that aducanumab can secure FDA approval, Biogen's future looks much more promising. If approved, it would be the first drug to reduce the clinical deterioration of Alzheimer's patients. It is almost certain that the company would have a megablockbuster in its hands that overshadowed the success of any of its other drugs.

Is the stock a purchase?

I think Biogen would be an action to buy if the likelihood of aducanumab approval was significant. But is this the case? Probably not.

At least two Wall Street analysts are skeptical. The analyst at R.W. Baird, Brian Skorney, wrote to investors that it is "highly unlikely" that aducanumab will obtain FDA approval. Geoffrey Porges of SVB Leerink expressed reservations about the data Biogen provided to substantiate his decision to seek approval for his experimental drug for Alzheimer's disease.