A potential rising star or an established leader? That's pretty much the choice for investors considering whether to buy Acadia Pharmaceuticals (ACAD +3.19%) or Biogen (BIIB 0.10%) stock.
So far in 2017, Biogen has been the better pick by far. The biotech's share price has risen nearly 20%, compared to only small gains for Acadia. But which of these two stocks is the better pick now? When investing in any biotech stock, the three key things to look at are current products, pipeline prospects, and financial position. Here's how Acadia and Biogen stack up in each category.
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Current products
Acadia currently has one product on the market: Nuplazid. The company won FDA approval for the drug in treating Parkinson's disease psychosis in 2016. In the first three quarters of this year, Nuplazid generated sales totaling $81.3 million. Analysts project the drug will bring in $1 billion annually by 2021.
Can Nuplazid hit this sales estimate? Maybe. It's the first and only drug approved for Parkinson's disease psychosis. Around 1 million patients in the U.S. have Parkinson's disease, and roughly 40% to 50% experience psychosis associated with the disease. However, Nuplazid faces one significant hurdle: The FDA required Acadia to include a black box warning on the product label related to an increased risk of death for patients taking the drug.
Biogen's current product lineup includes six leading multiple sclerosis (MS) drugs, three biosimilars, two cancer drugs that are licensed to Roche (RHHBY 0.95%), one new spinal muscular atrophy (SMA) drug, and a partridge in a pear tree (kidding). Still, the biotech claims a pretty solid list of drugs on the market that helped Biogen make nearly $9 billion in revenue in the first three quarters of 2017.
The problem for Biogen is that sales are declining somewhat for most of its MS drugs. Its MS franchise has long been the primary source of revenue for the biotech. SMA drug Spinraza is still picking up momentum, though, generating more than $521 million in sales during the first nine months of the year. The drug could reach peak annual sales of around $2.5 billion.
Even with Biogen's challenges, the sheer depth of its current lineup easily beats Acadia's one drug.
Advantage: Biogen
Pipeline prospects
Acadia's pipeline consists of Nuplazid and, well, that's pretty much it. The company is evaluating the drug in two late-stage studies for treatment of dementia-related psychosis and as an adjunctive therapy for schizophrenia where there has been an inadequate response on other therapies. Acadia is also testing Nuplazid in two midstage clinical studies for neurological disorders.
Biogen has two late-stage clinical programs, both targeting treatment of Alzheimer's disease. Aducanumab, developed with partner Neurimmune, is a monoclonal antibody. E2609, developed with partner Eisai, is a BACE inhibitor. The company's pipeline includes 10 midstage programs focused on treatment of various indications, from neurological disorders like Alzheimer's disease and MS to lupus and stroke. In addition, Biogen has four early stage drugs in development.
The biggest potential winner in Biogen's stable is aducanumab. Biogen has announced some encouraging clinical results that have some speculating that the drug could be a game changer in the treatment of Alzheimer's disease. However, there have been quite a few seemingly promising Alzheimer's drugs that ultimately failed, so the jury is still out on how effective and safe aducanumab will be.
Overall, though, Biogen has more opportunities for success with its pipeline than Acadia does.
Advantage: Biogen
Financial position
Acadia remains unprofitable. The company had cash, cash equivalents, and investment securities of $366.6 million at the end of the third quarter.
Biogen, on the other hand, is on track to post earnings of more than $4 billion this year. It reported cash, cash equivalents, and marketable securities totaling $3.5 billion at the end of the third quarter.
This category is no contest. Biogen is clearly in better financial position for the future.
Advantage: Biogen
The better buy
There's no suspense with this decision: Biogen definitely appears to be the better choice overall between these two biotech stocks.
That's not to say that Acadia won't be a winner over the long run. Investors sold off the stock after its disappointing third-quarter performance and an analyst downgrade. But the long-term prospects for Nuplazid weren't really dimmed because of those results. Acadia could enjoy a rebound, especially if the company has some positive news from its clinical studies.
And there are certainly reasons for investors to be cautious about buying Biogen stock. Newer rivals could further weaken Biogen's MS franchise. Its late-stage pipeline candidates are iffy. I think that Biogen is the better buy between these stocks, but I also think there are even better buys than Biogen.
