The Near-Term Setup For Biogen Has Positive Risk/Reward Written All Over It

While risks to the stock still remain, UBS has upgraded Biogen Inc BIIB from Sell to Neutral and has raised its price target for the stock from $262 to $270. At this point, the risks are fully priced into the stock, analyst Carter Gould wrote on Monday.

“In our view, the competitive threat to Biogen’s Spinraza (in Type I SMA patients) from gene therapy is now priced in and sentiment is near a bottom following the CFO’s recent departure,” Gould wrote.

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In addition, Phase 3 dosing changes reflect confidence in aducanumab’s safety, and UBS now anticipates Biogen will release interim data on the study in 2018.

Overall, UBS doesn’t see Biogen’s multiple sclerosis business as a major driver for the stock considering the increasingly competitive environment. In addition, generic competition will certainly come into play in the longer-term. Still, the risks associated with the MS business are offset by Biogens increasing focus on aducanumab, Gould wrote.

Looking ahead to Biogen’s Q2 earnings call, UBS is anticipating strong numbers from Spinraza, an update on a challenging MS market and details on the company’s strategic review. Gould said the strategic review update could be a great opportunity for the company to increase investor focus on aducanumab and highlight the potential positives associated with the dosage change.

UBS has raised its probability of success for aducanumab to 40 percent, which is still well below its typical 70-75 percent range for Phase III assets. However, the change in success probability has raised UBS’s implied value for the drug to $13 per Biogen share. UBS has also lowered Spinraza’s long-term value by $5 per share as well.