Sick Economics

Searching For Healthy Profits In The Stock Market


By Aidan Asbil


Biogen ($BIIB) has been a rollercoaster ride with many ups and downs for the company’s investors. However, things were looking especially grim for Biogen in recent years with multiple sell-offs of the stock. The company’s flagship Sclerosis drugs that were once market dominators, began to lose market share as competition grew and consumers gravitated towards both branded and generic rivals. Biogen hoped Spinraza, their drug for spinal muscular atrophy, would be a growth story, but the drug has so far had disappointing growth in sales. With a disappointing pipeline and overall revenue plummeting things were looking rough for the future of the company. All that was left for Biogen was getting FDA approval for their controversial Alzheimer’s drug aducanumab. It was unclear if the drug would get FDA approval, with a board of FDA advisors heavily suggesting against it. In an unexpected turn of events, the FDA surprisingly approved aducanumab saving Biogen’s financial future. With that being said, Biogen’s road to making the first Alzheimer’s drug was met with many struggles along the way. 

The Road to Biogen’s First Product

Biogen was founded in 1978 by a small group of visionary scientists, making it one of the oldest biotech companies in the world. A group of accomplished scientists and three venture capitalists gathered in Geneva, Switzerland, to make a new pharmaceutical company with an emphasis on breakthroughs in biology. This would become the origin of what we now call biotech companies. As a pioneer in the biotechnology industry, Biogen was destined for great things with two of its founders Walter Gilbert and Phillip Allen Sharp receiving Nobel Prizes in 1980 and later in 1993. With so much promise the company decided to IPO in 1983 becoming one of the first biotech companies to do so. Despite the promising research, the company had no actual products and was burning through cash. In 1985, the company hired James L. Vincent, an accomplished healthcare executive, to become their president and CEO of the company. Vincent sought to change Biogen for the better, but in order to accomplish his vision, the company would have to go through drastic changes. Biogen was burning through cash quickly and with no products, raising more money would prove to be very difficult. Vincent knew the company needed to focus its efforts on making a product and to do so meant getting rid of the majority of their research projects. Biogen cut or sold 85% of its projects and shrank the company from 500 employees to 225. While painful at the time, these crucial changes would set up the company for greatness. With new deals signed with Merck, Smith Kline Beecham, and Abbott for the use of patented Biogen discoveries in hepatitis vaccines, Biogen’s royalty income increased from just $1.7 million a year in 1986 to  $150 million in 1996. Vincents drastic changes paid off, but now it was time for Biogen to change the landscape of Biotech with their first product. 

In 1993, with no other effective treatments for multiple sclerosis available, the FDA approved the controversial drug Betaseron. However, since the drug had many adverse side effects, the creators of the drug did not expect the drug to be approved so quickly. Patients waiting to get Betaseron would have to wait months just to have a chance at getting the drug. With the multitude of side effects and huge manufacturing delays, Biogen jumped on the opportunity to make its own drug to treat MS. The company designed a third clinical trial, for Avonex with the intent to make a drug that actually slowed the progression of the disease rather than just reducing flareups. Biogen was able to accomplish just this, with the data on Avonex showing not only did the drug slow the progress of MS its side effects were much milder compared to its competitor Betaseron. With this news, Vincent would get his wish and the company would get FDA approval for its first product Avonex in 1996. Within months, Avonex dominated the market, getting 60% of all new prescriptions for the treatment of MS. With its first product, Biogen had made its mark on the biotech world. However, in order to reach new heights, the company would have to continue to make big moves to stay ahead of the competition. In 2003, the company did just that, by stunning the biotech world with their merger with Idec. The two companies were working on a licensing agreement for the development of future drugs. As negotiations went on the two companies realized the potential of a union, combining Idec’s prowess in developing cancer treatments and Biogen proven ability with the development of Avonex. The merger was at the time the largest biotechnology merger of two independent companies and propelled the union as the 3rd largest biotechnology company in the world only behind Amgen and Genetech. Biogen Idec was now finally at the top, but it wasn’t long until the company would find itself in controversy. 

Biogen Idec’s Slow Start

In 2004, the FDA approved natalizumab, more popularly known by its brand name Tysabri. Tysabri is a monotherapy for the treatment of patients with relapsing forms of MS. This was praised as a huge win for the company with the stock price increasing 60% in only a few months. However, things took a turn for the worse in 2005, when Biogen Idec and their licensing partner Elan voluntarily removed Tysabri because of the emergence of a case that caused a serious side effect that left the patient with a serious brain infection that could have lead to death or severe disability. With this news, the stock plummeted 50% and it would take the company 3 years to recover the stock to similar prices. Thankfully for the company, in 2006 after a comprehensive reevaluation of the drug and a review by the FDA, the drug was reapproved and reintroduced into the market. Despite its controversy, Tysabri would end up making the company billions when it was later approved for the treatment of Crohn’s disease in 2008. With this success, Biogen Idec began to expand its empire with a series of acquisitions, to grow its product lineup. In 2006, the company acquired, Conforma Therapeutics, a cancer research company for $250 million. Just a year later, Biogen Idec would acquire Snytonix Pharmaceuticals for $120 million which also gave them the rights to Snytonix lead product for hemophilia B and the technologies for inhalable treatments. Later that year they also would acquire the rights to a promising Alzheimer drug called Aducanumab for $200 million. With the acquisition of all these companies, Biogen Idec set itself up to have a very compelling future pipeline. Things were looking up for the company, with yearly revenue increasing from 3.1 billion to 4.1 billion from 2007 to 2008. With revenue increasing and a compelling pipeline the stock price increase 18% during this time. However, the next few years would prove to be difficult for Biotech star. 

Despite, the very compelling pipeline, Biogen Idec was still far away from FDA approval on any of its pipelines. Revenue numbers were increasing slowly, but not at rates that impressed investors. To make matters worse, billionaire Carl Icahn started slowly building a bigger stake in the company. Icahn was a notorious investor known for starting proxy wars and stirring the pot when he doesn’t get his way. In March 2010, Icahn owned about 16 million shares, more than 5 percent of the company, according to a regulatory filing. Biogen Idec shares continued to fall in price, which triggered Icahn and his appointed board members to push for the company to be a buy-out candidate. Biogen Idec would have to make drastic changes, in order to appease investors and save the company from getting bought out.

Biogen’s Return to Stardom

With the pressure on, the company decided to redefine its business strategy by focusing on neurology, immunology, and hemophilia. The company planned to launch five new drugs, in the next 3 years and hire a new head of research to propel their pipeline further. Biogen Idec pipelines began to pay off with Fampyra a drug that helps walking ability in patients with MS was FDA approved in 2010. Shortly after, the company was able to expand upon their blockbuster drug Rituxan, a monoclonal antibody for treating cancer. In 2011, the FDA approved for use in patients with Chronic lymphocytic leukemia. Things got even better for Biogen Idec as a study for their blockbuster pipeline drug Tecfidera, for treatment of MS, showed no safety concerns in clinical trials. In 2011, Biogen Idec’s revenue surpassed $5 billion, with sales increasing and the company’s thriving pipeline, investors began flocking to the stock. With the company’s blockbuster drugs Tecfidera, Tysabri, and Rituxan, revenue began to skyrocket to obscene numbers. In just three years Biogen Idec would nearly double its yearly revenue to $9.7 billion in 2014. Biogen Idec’s stock price skyrocketed 350% over this time going from about $60 a share in 2011 to over $260 in 2014. With Biogen Ideas huge success the company announced it would be going back to its root and change the company’s name back to Biogen in 2015. With investor’s sentiment at all-time highs, the company also announced another bombshell. In early 2014, Biogen entered into an agreement with Eisai to jointly develop and commercialize two of their candidates for Alzheimer’s disease, which showed great signs of potentially improving symptoms and suppressing disease progression. In 2015 Biogen Idec continued to impress the biotech world by providing evidence that its Alzheimer’s drug may be the first to successfully treat the underlying cause of the disease. In the drug’s clinical trial, the drug showed a slowing of the cognitive declines and dementia associated with Alzheimer’s, which when compared to the control group was an 82% improvement in mental symptoms. With this news, the stock price reached price levels as high as $395 as every investor in Biotech swarmed to get into potentially the first treatment for Alzheimer’s disease. In 2016 Biogen pipeline continued to come to fruition, with the first approved therapy for an inherited disorder called spinal muscular atrophy called Spinraza. Despite some corrections of the stock all-time highs, the company continued until Biogen’s revenue-making machine began to falter.

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Biogen’s Unlikely Comeback

Starting around 2016, like many Biotech companies, the stock began to become very volatile based off good and bad news. After the huge record highs of nearly $400 in 2015, the stock corrected all the way down to prices as low as $210. This was also due to a clinical setback on their experimental multiple sclerosis drug opicinumab. However, with the release of Spinraza and investors hopeful for updates on the company’s Alzheimer drug, the stock increased 75% to prices as high as $367 over the next 2 years. Investors were hopeful Biogen was looking positioned to continue becoming a revenue-generating machine. This sentiment would quickly change, however after a catastrophic failure in a key phase 3 trial of the company’s promising Alzheimer’s disease drug. In March 2019, the company halted its Phase 3 trial of its Alzheimer disease drug Aducanumab after an outside group determined the trials were unlikely to produce meaningful results. This news tanked the stock 30% practically overnight and investors who were hopeful for an Alzheimer’s disease drug were very displeased with the news. Things were looking very grim for Biogen, until the company reversed the decision in October 2019 and told investors they were planning on continuing the phase 3 trial. This decision was made after the company’s new study involving more patients showed more promising results. While this recovered the stock for some time, 2020 proved to be a very bad year for Biogen. In July 2020, Biogen submitted its request for accelerated review of its Alzheimers drug. The FDA advisory panel voted overwhelming against Biogen’s Alzheimer drug aducanumab, questioning the effectiveness of the drug. The company also suffered revenue loss, making $13.4 Billion in revenue in 2020 down from $14.38 Billion in 2019. This would mark the first time in at least 2 decades that the company posted lower year-to-year sales. To make matters worse, the company had 4 consecutive quarters of revenue lost, which shows a trend of revenue going down for the future. These losses came from sales of the companies MS drugs losing market share and Spinraza posting disappointing revenue growth numbers. Combine this with Biogen losing its patent rights to one of its key drugs Tecfidera and the company was looking to have a serious revenue problem in the future. With FDA approval of Aducanumab looking unlikely, Biogen’s days of being a biotech giant were looking to end soon. However, the company’s unlikely comeback would come on June 7th with the FDA going against their advisory board in an unprecedented approval of Aducanumab. With the aducanumab costing patients 56,000 a year and 6.2 million people suffering from Alzheimer’s in the U.S alone, the drug’s approval made it one of the most lucrative drugs ever created. Overnight the stock increased by 45% and the company was saved from disaster. 

What’s in Store for Biogen’s Future

While this approval doesn’t fix all of Biogen’s problems if the company is able to get even a fraction of the Alzheimer’s therapeutics market that is expected to reach $13.57 billion by 2027 their revenue problems should be completely fixed. The company’s current pipeline continues to look underwhelming, but huge companies like Biogen have continued to stay relevant in the past through acquisitions. With that being said recently Biogen has suffered some big losses from its acquisitions. Biogen had another Alzheimer’s drug with Bristol Myers that cost them $300 million and just missed its primary efficacy endpoint. The company’s $800 million buyout of Nightstar is also looking to take a turn for the worst with a critical phase 3 trial for gene therapy failing. While many of these ultimately fail, the few that get FDA approval can be very lucrative making Biogen billions in revenue.  Biogen has had a rollercoaster ride from start to finish, but now with Biogen’s first FDA-approved Alzheimer’s medication, the company has managed to propel its way back to an unlikely comeback.


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