In a single day, shares of Biogen (NASDAQ: BIIB) erased the year’s losses by soaring 19.63 percent. Positive data for its Alzheimer’s candidate, BAN2401, drew investors back to the stock and to the biotechnology sector. With profit-taking likely for this stock, investors will still watch what happens next in the sector.
Biogen, whose forward P/E is now 13.6 times on a $62 billion market cap, rose after Phase 2 clinical study numbers achieved statistical significance.
The drug demonstrated efficacy at 18 months for slowing the progression in early Alzheimer’s disease. The study involved 856 patients.
In the five dose treatment through 18 months, the trial resulted in a reduction in amyloid levels in the brain. Now that the anti-amyloid antibody pathway is proven to work, Biogen may continue the study.
Although a commercial product will not come to market for many years, the revenue potential from the drug will lower investor risks for holding BIIB stock.
At a P/E of around 18 times, Biogen’s risk/reward play favors continuing to hold the stock. Neurological diseases are hard to treat and have few players successful in this space. This bodes well for Biogen in the longer-term: it will continue to have little competitive risks.
