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Forget Biogen (BIIB), Buy These 5 Biotech Stocks Instead
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Biogen Inc.’s (BIIB - Free Report) shares declined 12.8% yesterday with the company announcing disappointing top-line results on one of its most-watched experimental multiple sclerosis (MS) treatments, opicinumab (anti-LINGO-1). The company said that opicinumab missed the primary as well as secondary efficacy endpoint in a mid-stage study (Read more: Why is Biogen Stock Plunging Today?).
Biogen is a well-known name in the MS market and generates a major part of its revenues from its MS franchise. The company is focused on bringing new MS treatments to market. However, Biogen is currently facing challenges in the MS market with its interferon treatments being impacted by the continuing shift to oral therapies, Tysabri facing competition from oral treatments and Tecfidera facing a slowdown since the emergence of the first progressive multifocal leukoencephalopathy (PML) case.
Moreover, recently approved Zinbryta is not expected to be a major contributor to the top-line given the product label – firstly, it is basically a third-line treatment option (approved for use in patients who have not responded adequately to two or more MS drugs); and secondly, it has serious safety risks including liver injury and immune conditions. Zinbryta has a boxed warning and is available only under a Risk Evaluation and Mitigation Strategy (REMS). These two factors are likely to limit the commercial potential of the drug.
Biogen’s sales and promotional practices are also under state and federal government investigation and the company has received related subpoenas. In early Mar 2016, Biogen received a subpoena from the federal government for documents relating to its relationship with non-profit organizations that provide assistance to patients taking drugs sold by Biogen.
Lack of near-term pipeline catalysts, the MS franchise’s performance, Tecfidera patent challenges and pipeline setbacks will remain an overhang on the shares. In such a scenario, we advise investors to forget Biogen and invest in biotech stocks which sport a strong Zacks Rank and have interesting pipelines/products and growth potential.
Our Choices
Cambridge, MA-based Merrimack Pharmaceuticals, Inc. (MACK - Free Report) has transitioned from a development-stage company to a commercial-stage company following the FDA approval of cancer treatment, Onivyde, in Oct 2015. Onivyde is off to an encouraging start and its addition to the National Comprehensive Cancer Network (NCCN) 2016 Clinical Practice Guidelines in Oncology as a category I Treatment Option should also boost sales. This Zacks Rank #2 (Buy) stock is working on expanding Onivyde’s label and has several interesting candidates in its pipeline for different types of cancer.
San Diego, CA-based Retrophin, Inc. has been consistently delivering positive earnings surprises over the last four quarters. This Zacks Rank #1 (Strong Buy) stock has three marketed products in its portfolio. The company has an important pipeline event coming up with top-line results from the phase II sparsentan study (focal segmental glomerulosclerosis - FSGS) expected in the third quarter.
Cambridge, MA-based Idera Pharmaceuticals, Inc. is a clinical-stage company focused on the discovery, development and commercialization of novel therapeutics for cancer and rare diseases. This Zacks Rank #2 stock has two distinct proprietary drug discovery technology platforms - toll-like receptor (TLR) targeting technology and third-generation antisense (3GA) technology. Idera’s TLR agonists have the potential to be applied in immuno-oncology, a therapeutic area that has been garnering a lot of interest and activity from both large as well as small/mid-sized pharma and biotech companies. These treatments hold huge commercial potential and have the ability to change the treatment paradigm.
Ardsley, NY-based Acorda Therapeutics, Inc. is a commercial-stage biopharmaceutical company focused on the development and commercialization of novel treatments that improve neurological function in people suffering from multiple sclerosis (MS), spinal cord injury (SCI) and other nervous system disorders. This Zacks Rank #2 stock has consistently surpassed earnings expectations over the last four quarters. Ampyra continues to perform well and Acorda is progressing with its pipeline.
La Jolla, CA-based Ligand Pharmaceuticals Incorporated (LGND - Free Report) is a biotechnology company with a focus on drug discovery, reformulation and partnering. The company’s Captisol formulation technology has allowed it to enter into several licensing deals and generate royalties. This Zacks Rank #2 stock's earnings performance is pretty impressive with the company delivering positive earnings surprises over the last four quarters. Ligand’s raised outlook for 2016 is encouraging. Geographical and label expansion of its key partnered assets, Promacta and Kyprolis, the anticipated approval and launch of up to five new partnered products, and continued development of the partnership portfolio are likely to boost the top line throughout 2016.
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Forget Biogen (BIIB), Buy These 5 Biotech Stocks Instead
Biogen Inc.’s (BIIB - Free Report) shares declined 12.8% yesterday with the company announcing disappointing top-line results on one of its most-watched experimental multiple sclerosis (MS) treatments, opicinumab (anti-LINGO-1). The company said that opicinumab missed the primary as well as secondary efficacy endpoint in a mid-stage study (Read more: Why is Biogen Stock Plunging Today?).
Biogen is a well-known name in the MS market and generates a major part of its revenues from its MS franchise. The company is focused on bringing new MS treatments to market. However, Biogen is currently facing challenges in the MS market with its interferon treatments being impacted by the continuing shift to oral therapies, Tysabri facing competition from oral treatments and Tecfidera facing a slowdown since the emergence of the first progressive multifocal leukoencephalopathy (PML) case.
Moreover, recently approved Zinbryta is not expected to be a major contributor to the top-line given the product label – firstly, it is basically a third-line treatment option (approved for use in patients who have not responded adequately to two or more MS drugs); and secondly, it has serious safety risks including liver injury and immune conditions. Zinbryta has a boxed warning and is available only under a Risk Evaluation and Mitigation Strategy (REMS). These two factors are likely to limit the commercial potential of the drug.
Biogen’s sales and promotional practices are also under state and federal government investigation and the company has received related subpoenas. In early Mar 2016, Biogen received a subpoena from the federal government for documents relating to its relationship with non-profit organizations that provide assistance to patients taking drugs sold by Biogen.
Lack of near-term pipeline catalysts, the MS franchise’s performance, Tecfidera patent challenges and pipeline setbacks will remain an overhang on the shares. In such a scenario, we advise investors to forget Biogen and invest in biotech stocks which sport a strong Zacks Rank and have interesting pipelines/products and growth potential.
Our Choices
Cambridge, MA-based Merrimack Pharmaceuticals, Inc. (MACK - Free Report) has transitioned from a development-stage company to a commercial-stage company following the FDA approval of cancer treatment, Onivyde, in Oct 2015. Onivyde is off to an encouraging start and its addition to the National Comprehensive Cancer Network (NCCN) 2016 Clinical Practice Guidelines in Oncology as a category I Treatment Option should also boost sales. This Zacks Rank #2 (Buy) stock is working on expanding Onivyde’s label and has several interesting candidates in its pipeline for different types of cancer.
San Diego, CA-based Retrophin, Inc. has been consistently delivering positive earnings surprises over the last four quarters. This Zacks Rank #1 (Strong Buy) stock has three marketed products in its portfolio. The company has an important pipeline event coming up with top-line results from the phase II sparsentan study (focal segmental glomerulosclerosis - FSGS) expected in the third quarter.
Cambridge, MA-based Idera Pharmaceuticals, Inc. is a clinical-stage company focused on the discovery, development and commercialization of novel therapeutics for cancer and rare diseases. This Zacks Rank #2 stock has two distinct proprietary drug discovery technology platforms - toll-like receptor (TLR) targeting technology and third-generation antisense (3GA) technology. Idera’s TLR agonists have the potential to be applied in immuno-oncology, a therapeutic area that has been garnering a lot of interest and activity from both large as well as small/mid-sized pharma and biotech companies. These treatments hold huge commercial potential and have the ability to change the treatment paradigm.
Ardsley, NY-based Acorda Therapeutics, Inc. is a commercial-stage biopharmaceutical company focused on the development and commercialization of novel treatments that improve neurological function in people suffering from multiple sclerosis (MS), spinal cord injury (SCI) and other nervous system disorders. This Zacks Rank #2 stock has consistently surpassed earnings expectations over the last four quarters. Ampyra continues to perform well and Acorda is progressing with its pipeline.
La Jolla, CA-based Ligand Pharmaceuticals Incorporated (LGND - Free Report) is a biotechnology company with a focus on drug discovery, reformulation and partnering. The company’s Captisol formulation technology has allowed it to enter into several licensing deals and generate royalties. This Zacks Rank #2 stock's earnings performance is pretty impressive with the company delivering positive earnings surprises over the last four quarters. Ligand’s raised outlook for 2016 is encouraging. Geographical and label expansion of its key partnered assets, Promacta and Kyprolis, the anticipated approval and launch of up to five new partnered products, and continued development of the partnership portfolio are likely to boost the top line throughout 2016.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>