Mizuho Sees Near-Term Trading Opportunity in Biogen (BIIB) Amid Weakness

Mizuho analyst Salim Syed weighed in on Biogen (NASDAQ: BIIB) after Eli Lilly announced this morning that its Alzheimer's drug, Solanezumab Phase 3 study has failed and it will not pursue approval which has implications to Biogen's Aducanumab.

Syed commented, "While we are long-term Neutral on BIIB (given other risks we see in the business), we believe today's news and downward price movement in BIIB stock presents a near-term trading opportunity for BIIB given the differences in molecule, trial designs, and BIIB's drug remains to be the only Alzheimer's drug that has prospectively hit (we believe) its primary endpoint in a previous study. Every 10% POS increment is worth about $6-7 to our DCF (we currently POS Aducanumab at 60% in our model -- hard to gauge exactly where consensus given Phase 3 readout for Aducanumab is not until 2020+, but we note most investors we speak to seem to like Aducanumab). If we were to take Aducanumab out of our model completely, our DCF decreases by about $40-45. BIIB's stock is currently down about $30 pre-market (this would imply a POS decrease from 60% to 20% in our model)."

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