Piper Sandler has adjusted its price target for Biogen (NASDAQ: NASDAQ:BIIB), a biotechnology company, from the previous $313.00 to a new target of $307.00 while maintaining an Overweight rating on the company's shares.
The revision, published on Friday, follows the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP)'s negative recommendation regarding Biogen's Alzheimer's disease treatment, Leqembi, in Europe.
The CHMP concluded that the clinical benefit of Leqembi on cognitive function, as measured by CDR-SB, was minimal and did not outweigh the safety concerns associated with the risk of Amyloid-related imaging abnormalities (ARIA). The decision comes as a setback for Biogen, whose partners Eisai and BioArctic have pledged to seek a re-examination of the product.
Despite the negative stance from the CHMP, Piper Sandler believes that, due to the dynamics of the Leqembi Collaboration Agreement with Eisai, eliminating the potential revenue from this opportunity has a relatively modest impact on Biogen’s valuation.
The analyst from Piper Sandler, however, expressed skepticism about the prospects for a successful appeal for Leqembi and also questioned the likelihood of EU approval for donanemab, another Alzheimer's treatment developed by Eli Lilly (NYSE:LLY).
The analyst noted the significance of the CHMP's decision, pointing out that it denies European patients access to what could have been the first disease-modifying treatment for Alzheimer's disease and the first new therapy for the condition in many years.
InvestingPro Insights
As Biogen (NASDAQ:BIIB) navigates the challenges following the CHMP's stance on Leqembi, investors may find solace in the company's financial resilience and market behavior. With a market capitalization of $31.03 billion and a lower adjusted P/E ratio of 18.64 for the last twelve months as of Q1 2024, Biogen presents a robust financial profile. Additionally, the firm's gross profit margin remains high at 75.49%, underscoring its efficiency in generating revenue relative to costs.
An InvestingPro Tip highlights that Biogen is a prominent player in the Biotechnology industry, which may reassure investors about the company's standing and potential for future growth despite recent setbacks. Moreover, the company's liquid assets surpassing short-term obligations is a testament to its financial health and ability to weather adverse events.
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