Biogen Inc. shares dropped 5.5% in morning trade Thursday after the company was downgraded by Leerink and Morgan Stanley to market perform with a $300 price target and equal-weight with a $305 price target, respectively. Analysts at both companies noted lackluster sales for Biogen’s Spinraza, which is the first drug approved for spinal muscular atrophy but has awhopping price tag: up to $750,000 in the first year, then $375,000 in later years. They also pointed to Biogen’s Alzheimer’s disease drug aducanumab, which is promising but risky, and could take two or more years for additional clinical trial results. Biogen is currently entangled in patent litigation over Tecfidera, a multiple sclerosis drug that is Biogen’s largest revenue generator. Decisions in those two cases are “the biggest near-term up/down driver where we have limited visibility on the outcome,” said Morgan Stanley analyst Matthew Harrison, who predicted outcomes for both around March 22 that could drive the stock down as much as 10% or up 5-10%. “What was previously mostly opportunity for Biogen’s stock (trial results, new product launch, takeout potential) has now shifted to risk, with significant competitors approaching for Biogen’s critical MS franchise, slower than expected near term adoption of Spinraza, and at least two more years until results emerge from the company’s Alzheimer’s disease program,” said Leerink’s Geoffrey Porges. Morgan Stanley’s Harrison emphasized that he had a positive long-term view of the company and its Alzheimer’s drug, but “we see limited near-term upside.” Shares of Biogen have risen 5.2% over the last three months, compared with a 5.4% rise in the S&P 500 .
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