DB upgrades BIIB to buy, PT$129 / large report, concerns adressed
We see 3 areas of upside: BG-12, Tysabri & Hemophilia; upgrade to Buy We view Biogen Idec as the large cap biotech stock with the greatest opportunity for upside: 1) Our analysis suggests CONFIRM will show BG-12 is more effective than Copaxone & DEFINE data will remain strong. Combo BG-12 & daclizumab Q3 data are under-appreciated. 2) We believe Tysabri will reach a positive inflection by YE:11 with most pts on drug being JCV negative in US. 3) Our due diligence suggests a greater likelihood of success for hemophilia trials in '12. This report is a deep dive into all 3 drivers. Upgrade to Buy & $129 TP.
BG-12: Our work suggests CONFIRM will be positive for Biogen Consultants we spoke w/ suggest that BG-12’s top-line profile is BETTER than we had anticipated. In DEFINE, we expect diarrhea rates to be marginally greater vs. placebo & Avonex rescue to have minimal impact. CONFIRM data we believe will show BG-12 is at least as effective if not slightly better vs. Copaxone (but our checks suggest AS EFFECTIVE is sufficient for market uptake - esp w/ combo BG- 12 + ABCR data). We raised our BG-12 ests to $3.2B+, 20% above consensus. Tysabri inflection point approaching-increases our confidence in $2.7B sales Our proprietary analysis of STRATIFY 2 patient enrollment suggests most patients will be JCV negative by YE11 in the US. This will increase duration of therapy and reduce drop outs. EU will follow shortly. We have raised the probability of success we assign to hemophilia Repeat dosing of several patients in the Factor IX study has already occurred. Our checks indicate no issues upon repeat dosing and this gives us greater confidence in success of Biogen’s hemophilia program (rFIXFc & rFVIIIFc), as neutralizing antibodies are key risk to these studies. We assign a 25% probability to $3.2B rFVIIIFc & $337M rFIXFc peak sales. Biogen’s Factor VIII (rFVIIIFc) therapy will be competitive, our checks show Our industry checks tell us that 2x half-life is about the max improvement achieved in any longer acting Factor VIII therapy. Therefore, we believe that the battle will come down to marketing and acceptance with hemophilia docs and societies. BIIB is the only company with pivotal studies in Factor 8, and we have heard growing excitement around BIIB's therapies with docs. Hence, if 2x is the half-life cap BIIB is in the development lead BIIB should be first to market.
DB will host 3 (!) conference calls for investors on Biogen:
This report is 3 deep-dives in one: Join us for our conference call series Join us for a conference call **TUESDAY** 6/21 @ 10 AM ET to discuss: An OVERVIEW of our new 3-part BIOGEN THESIS (800) 309-8606 | Intl: (706) 679-0645 | Conf ID: 77616528 Join us for a conference call **THURSDAY** 6/23 @ 10 AM ET to discuss: Our BG-12/3Q11 data catalysts & Tysabri DEEP DIVES (800) 309-8606 | Intl: (706) 679-0645 | Conf ID: 77758455 Join us for a conference call **TUESDAY** 6/28 @ 10 AM ET to discuss Our HEMOPHILIA DEEP DIVE (800) 309-8606 | Intl: (706) 679-0645 | Conf ID: 77763949