On Friday, Goldman Sachs reiterated its Buy rating and $342.00 price target on Biogen (NASDAQ:BIIB), despite recent challenges the company has faced with its Alzheimer's drug, Leqembi. The European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) has recently adopted a negative opinion on the drug, citing concerns that its benefits do not outweigh its risks, especially for certain patient groups. Biogen management anticipates receiving a detailed formal opinion from the CHMP next week, which will clarify the committee's reasoning and help determine the company's next steps.
The CHMP's concerns center around the safety risks associated with Leqembi, including amyloid-related imaging abnormalities (ARIA), particularly for patients with two copies of the ApoE4 gene. Biogen, in collaboration with Eisai, plans to appeal the decision within 15 days of receiving the formal opinion. The appeal process will include a 60-day active review period that may extend into further discussions.
Goldman Sachs also noted that the CHMP's decision might have been influenced by the current lack of infrastructure in the European Union for monitoring ARIA, a point that was echoed by Key Opinion Leaders (KOLs) at Goldman Sachs' Innovation Clinic. The investment firm is awaiting further insights from Biogen's earnings call on August 1, which is expected to address the drug's uncertain future in Europe, including issues related to its approval, labeling, and potential reimbursement.
In addition to the challenges with Leqembi in Europe, Goldman Sachs is fielding inquiries about the drug's second-quarter financial performance and its impact from the approval of Eli Lilly (NYSE:LLY)'s Alzheimer's drug, Kisunla. Over a longer term, there is interest in Biogen's strategy to counteract the decline in its base business through the launch of key products and business development initiatives.
In other recent news, Biogen faced a setback as the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) gave a negative recommendation for its Alzheimer's treatment, Leqembi. The company, along with its partners Eisai and BioArctic, plans to seek a re-examination of the product. Despite this, Piper Sandler and RBC Capital have adjusted their price targets for Biogen to $307 and $282 respectively, while maintaining positive ratings.
Additionally, Biogen terminated its Phase 2 study of SAGE-324, an investigational drug for essential tremor, due to failure to meet the primary endpoint. The company also recently completed the acquisition of Human Immunology Biosciences, integrating its late-stage therapeutic candidate, felzartamab, into its immunology pipeline. Finally, in collaboration with Eisai, Biogen launched Leqembi in China. These are the latest developments for Biogen.
InvestingPro Insights
As Biogen (NASDAQ:BIIB) navigates through the regulatory hurdles in Europe for its Alzheimer's drug, Leqembi, it's essential to consider the company's financial health and market performance. InvestingPro data indicates that Biogen has a market capitalization of $31.11 billion and maintains a solid P/E ratio of 26.6, which adjusts to a more attractive 18.74 on a last twelve months basis as of Q1 2024. This reflects a company that, despite recent challenges, is valued by the market for its earnings potential. Moreover, Biogen's gross profit margin remains high at 75.49%, showcasing its ability to maintain profitability in its operations.
InvestingPro Tips also highlight that Biogen is a prominent player in the biotechnology industry and that its stock generally trades with low price volatility. This could provide some comfort to investors who are concerned about the risks associated with the CHMP's negative opinion on Leqembi. Additionally, with analysts revising their earnings upwards for the upcoming period and predicting profitability for the year, there is a sense of optimism around the company's financial prospects.
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