UPDATE: Stifel Downgrades Biogen (BIIB) to Hold

(Updated - March 23, 2015 11:30 AM EDT)

Stifel downgraded Biogen (NASDAQ: BIIB) from Buy to Hold and removed its price target (prior $451.00). Last week Biogen excited Wall Street when it reported positive data from its Phase 1b study of aducanumab (BIIB037) in Alzheimer’s disease. Analyst Thomas Shrader noted definitive data is still years away. He also noted safety could be an issue.

"Despite our belief that Biogen Idec is in the driver’s seat in neurological drug development at a highly productive time in this important area of medicine, the recent and highly provocative BIIB037 data resulted in the stock’s reaching what we believe is a reasonable price target for the next 12 months. In addition, as we enter a somewhat quiet time for the BIIB037 and anti-LINGO programs the company still doesn’t seem to have addressed the ‘514 pound gorilla in the room: the Tecfidera patent issues and the potential that an interference proceeding could be declared any day," said Shrader.

Commenting further on BIIB037's safety, he said "... the possible safety issues from this trial may result in BIIB037 being the Tysabri of AD (clearly effective but a little scary) or even not a drug at all. At this early stage of development, we assign a value of about $15 per share to this program. This value is based on about 20% of AD patients qualifying for the drug (based on disease stage), a yearly cost of about $35,000, and significant penetration of this patient population (10-65% over the first 7 years after launch)," continued the analyst.

Shrader added, "However, due to all the issues raised above, we expect sales to begin no earlier than 2019 and we apply a 50% discount rate to future income from the program (see table). This $15 / share valuation doesn’t include the fact that Eisai has some opt-in rights to this program. When added to our last price target of $451, the new program suggests BIIB’s stock is worth $466, which is very close (2% below) to the closing price of $476 of Biogen’s stock at the end of trading on Friday."

For an analyst ratings summary and ratings history on Biogen click here. For more ratings news on Biogen click here.

Shares of Biogen closed at $475.98 yesterday.

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