This Biotechnology Stock Is On The Roll
Kanak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Biogen Idec (NASDAQ: BIIB) is in the news again; on July 4, 2013 the company presented new data in support of clinical and safety profile for ELOCTATE, its candidate for hemophilia A that it is developing in partnership with Swedish Orphan Biovitrum AB. Earlier, in May this year, the FDA had accepted the company’s Biologics License Application (BLA) for the marketing approval of ELOCTATE. Biogen now has product candidates for both hemophilia A and B. Given its long list of major marketed drugs, I am bullish on the stock as of now.
Hemophilia A treatment angle
Hemophilia A is a rare, inherited blood disorder in which the ability of the patient’s blood to clot is severely reduced. It is caused by a congenital deficiency or absence of Factor VIII, which is required for blood clotting. Patients with hemophilia A need to be given Factor VIII injections for restoring the process of coagulation in order to prevent frequent bleeds, which among other things may lead to life-threatening hemorrhages.
About ELOCTATE for Hemophilia A
ELOCTATE, a recombinant Factor VIII Fc fusion protein, belongs to a new class of long-lasting clotting factor therapies that Biogen is developing with its proprietary monomeric Fc fusion technology, which delays the destruction of the factor and cycles it back into the bloodstream.
New data presented this month at the XXIV International Society on Thrombosis and Haemostasis (ISTH) Congress in Amsterdam, showcases ELOCTATE’s potential of reducing the number of injections required by hemophilia A patients and efficacy in controlling bleeding and treating episodes of acute bleeding.
About ALPROLIX for Hemophilia B
A day earlier, the company had presented new data for ALPROLIX that supported its safety, efficacy and pharmacokinetic profile. ALPROLIX, also being developed in collaboration with Swedish Orphan Biovitrum, is a recombinant factor IX Fc (rFIXFc) fusion protein, Biogen’s candidate for treatment of hemophilia B. As per the new data released by the company, one injection of ALPROLIX helped control more than 90% of bleeds. Earlier Phase III results had shown that ALPROLIX could effectively control and prevent bleeding and perioperative management.
In a pharmacokinetic analysis it was found that ALPROLIX had more than double the longevity of Pfizer’s (NYSE: PFE) BeneFIX, a recombinant factor IX (or Christmas factor) also used to treat Hemophilia B. Global sales of BeneFIX have grown at the rate of nearly 12% and reached $775 million in 2012.
Both ALPROLIX and ELOCTATE came to Biogen with the acquisition of Syntonix Pharmaceuticals in January 2007.
About Biogen Idec
Established in 1978, Biogen Idec is among the world’s oldest independent biotechnology companies. The company focuses on neurodegenerative and autoimmune disorders and hemophilia. Its portfolio of ten approved drugs include four for treatment of various forms of multiple sclerosis, including TECFIDERA (dimethyl fumarate), which was successfully launched this year in the U.S. Analysts expect 2013 sales of TECFIDERA to be around $422 million in 2013.
Biogen’s annual revenues for 2012 were $5.52 billion, an increase of over 8% from prior year. The company reports its second quarter 2013 financial figures on July 25, 2013. Analysts expect the company to report Q2 2013 EPS at $1.91 against $1.82 reported for the same quarter prior year. For the full year the street expectation is $7.90 per share against the $6.54 per share reported for FY 2012.
Baxter Healthcare (NYSE: BAX) also has a prophylactic drug for Hemophilia A – ADVATE (Antihemophilic Factor (Recombinant factor VII). Baxter is a $37.61 billion (market cap) company and a competitor of Biogen Idec as it also focuses on hemophilia and immune disorders apart from other chronic and acute conditions including infectious diseases and kidney disorders. Baxter’s range of products generated revenues to the tune $14.19 billion in FY 2012 and earnings of $4.14 per share. Baxter is a dividend paying company with a dividend yield of 2.82%. The street expects a small increase in full year 2013 EPS at $4.66.
The market expects ELOCTATE and ALPROLIX to be approved by the FDA in early 2014. According to the collaboration agreement with its partner, Biogen leads the development and manufacturing and commercialization rights of both drugs in North America and all other regions not covered by the Swedish company. Swedish Orphan Biovitrum, however, has the option of assuming the final development and commercialization in Europe, Middle East and Northern Africa.
Hemophilia A occurs in roughly 5,000 male babies born every year and hemophilia B occurs in one out of every 25,000. Both the drugs open a new avenue of revenue for Biogen and are expected to generate revenues of around $200 million in 2014 and $375 million in 2015.
On the negative side is the uncertainty regarding TECFIDERA – it is not certain that the European regulator, European Medicines Agency (EMA) will grant it regulatory data protection in Europe. This could open the way for generic manufacturers to launch cheaper versions in the market and affect long term profitability of Biogen.
Biogen stock has appreciated almost 50% since January 2013, which is nothing new for it as it has returned 274% in the last five years. Considering everything, I would suggest investors to hold the stock and those wanting to buy, to exercise caution and buy only at dips.
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