Please ensure Javascript is enabled for purposes of website accessibility

Why Biogen Stock Popped Today

By Prosper Junior Bakiny - Jan 29, 2021 at 1:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company's potential drug for Alzheimer's disease continues to generate headlines.

What happened?

On Friday morning, Biogen (BIIB 3.40%) released an update regarding its Biologics License Application (BLA) for aducanumab as a potential treatment for Alzheimer's disease (AD). The drugmaker wasn't too forthcoming with details in this update -- and there was certainly a lot left to interpretation -- but at least one Wall Street analyst thinks it was good news for the biotech. As a result of these developments, shares of Biogen have risen sharply on Friday and were up by 6% as of 1:43 p.m. EST, after jumping by as much as 10.6% earlier in the day. 

So what

The saga surrounding aducanumab has been going on for a while. As a reminder, Biogen originally discontinued this drug's development back in March 2019, as it didn't look likely to meet its primary endpoint in a pair of late-stage clinical trials. But an analysis of a larger dataset of these studies turned out to show evidence that aducanumab did, in fact, help reduce the cognitive declines associated with AD, at least according to Biogen. 

That's why, in October 2019, the company resurrected this project. Biogen submitted a BLA to the U.S. Food and Drug Administration in July 2020, and the health industry regulator granted the experimental medicine priority review with a PDUFA date of March 7, 2021.

Letter blocks spelling "bullish."

Image source: Getty Images.

Today, Biogen announced that the FDA has decided to extend the review period of aducanumab's BLA by three months and set a new PDUFA date of June 7, 2021. The company also mentioned that it had submitted "additional analyses and clinical data, which the FDA considered a Major Amendment to the application that will require additional time for review." 

It is not immediately clear whether this is good or bad news, at least to me. But Stifel Financial analyst Paul Matteis saw the news as a "bullish sign." According to him, the approval of aducanumab is now more likely than not. The analyst upgraded Biogen's stock to buy from hold and assigned it a new price target of $358, up from $258. Biogen's shares are worth $284.74 apiece as of this writing. 

Now what

In my view, investors should remain cautious regarding the prospects of aducanumab. Let's not forget that in November 2020, an advisory committee convened by the FDA overwhelmingly voted against approving the medicine. The potential AD drug could still go on to get the green light from regulators. But there are certainly good reasons to think that it won't. For those willing to take on this risk, it might be wise to initiate only a small position in this biotech stock

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Biogen Inc. Stock Quote
Biogen Inc.
$199.65 (3.40%) $6.56
Stifel Financial Corp. Stock Quote
Stifel Financial Corp.
$59.70 (-0.07%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.