PropThink: Biogen Idec's BG-12 PDUFA Delay is a Buying Opportunity
(Thomson Reuters ONE) -
By Ivan Deryugin
The biotechnology sector can be broken up, at its simplest, into two distinct
groups: the Big 4, and every other company. The Big 4 are Amgen (NASDAQ:AMGN),
Celgene (NASDAQ:CELG), Gilead Sciences (NASDAQ:GILD), and Biogen Idec
(NASDAQ:BIIB). Many investors view the Big 4 as stable investments, with the
tradeoff being that they have few meaningful growth drivers. The past several
years, however, have been defined by these companies disproving that assertion.
Gilead, for example, is poised to dominate the hepatitis C market when GS-7977
is approved. And Biogen Idec is poised to cement its grip on the MS market when
BG-12 is approved. However, a recent FDA action to extend the review process of
BG-12 has sparked a miniature selloff in shares of Biogen, a selloff that is
unwarranted.
Since October 17, shares of Biogen are down almost 7%, underperforming the S&P
500, which is down almost 3%. The FDA announced on October 18 that it would be
taking an additional 3 months to review Biogen Idec's NDA for BG-12, and it
declined to provide detailed reasoning. This PDUFA delay to sometime in March
caused investors to assume that there were safety issues, due in large part to
the fact that Abbot Laboratories (NYSE:ABT) was forced to halt trials of its
kidney cancer drug bardoxolone. BG-12 and bardoxolone share some chemical
similarities, so it is likely that investors feared that the FDA discovered
safety issued with BG-12. Biogen denied that this was the reason for the FDA's
review extension, arguing that BG-12 and bardoxolone have distinct
pharmacological profiles, and that the safety of BG-12 has been well established
in multiple trials. Biogen Idec is likely correct in its assessment. Abbot's
drug was not rejected, but rather halted in Phase III tests when safety issues
were discovered. BG-12 went through Phase III testing with no safety issues
presented.
Furthermore, there is historical precedent for the FDA's decision. Novartis
(NYSE:NVS) also experience this 3-month extension with its Gilenya filing, as
did Sanofi (NYSE:SNY) and its Aubagio filing. Both drugs were approved after
their respective 3-month extensions. The complexity of these approval filings is
likely what triggered the 3-month extensions. Given the importance of BG-12 to
the future growth of Biogen (Merrill Lynch, for example, values BG-12 at $41 per
share, or 23.16% of its $177 price target), the company's Q3 earnings conference
call was filled with questions regarding the PDUFA extension. George Scangos,
Biogen's CEO, took a good deal of time to address this issue. On the call, he
said:
"Why am I not surprised that's the first question? [Did Biogen Idec receive a
reason from the FDA for the review delay?] Okay, look, technically, the answer
to your question is, yes, it is a major amendment. But let's understand what the
term - major amendment is kind of a term of art. So in the normal review of an
FDA - of an NDA, the FDA asks questions of the sponsor and to which the sponsor,
in this case us, response in writing. So the FDA has the ability to determine
that any of those responses can be classified as a major amendment. And so by
doing so, the FDA extends the PDUFA date for 3 months, and as far as we know,
there is no other mechanism by which the FDA can extend the PDUFA date by 3
months. So the fact that a response is classified as a major amendment doesn't
necessarily mean that there are problems with the application or the drug. It
can mean only that the FDA believes it needs more time to review the
application, the answers to the questions, and will not be able to meet the
original PDUFA date. And we believe that's the case with our application. And as
you know, Eric, a 3-month extension has been applied to a lot of other
compounds, including recent approvals in MS. So we believe we're on track, and
we have a 3-month delay."
This delay, while unexpected, is not without precedent, and it is unlikely to
have any major effects on BG-12. This is the third time the FDA has requested an
extension to review a new MS drug, and the chances of this third time being
different from the first two is small. BG-12's safety has been well established
in many trials, as has its efficacy. And if and when BG-12 is finally approved,
it may very well spark a second catalyst that will send Biogen Idec's stock
higher. That catalyst is capital deployment. Continue reading this article by
clicking here.
See this article in its original format.
About PropThink
PropThink is an intelligence service that delivers long and short trading ideas
to investors in the healthcare and life sciences sectors. Our focus is on
identifying and analyzing technically-complicated companies and equities that
are grossly over or under-valued. We offer daily market coverage, weekly feature
stories, and a newsletter to investors who subscribe on PropThink.com. To learn
more, follow us on Twitter or visit us at http://www.propthink.com.
Disclaimer:
You should assume that as of the publication date of any report or letter,
PropThink, LLC and persons or entities with whom it has relation ships
(collectively referred to as "PropThink") has a position in all stocks (and/or
options of the stock) covered herein that is consistent with the position set
forth in our research report. Following publication of any report or
letter, PropThink intends to continue transacting in the securities covered
herein, and we may be long, short, or neutral at any time hereafter regardless
of our initial recommendation. To the best of our knowledge and belief, all
information contained herein is accurate and reliable, and has been obtained
from public sources we believe to be accurate and reliable, and not from company
insiders or persons who have a relationship with company insiders. PropThink was
not compensated to publish this article. Our full disclaimer is available
at http://www.propthink.com/disclaimer.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: PropThink via Thomson Reuters ONE
[HUG#1654140]
Unternehmensinformation / Kurzprofil:
Datum: 31.10.2012 - 16:09 Uhr
Sprache: Deutsch
News-ID 198246
Anzahl Zeichen: 7069
contact information:
Town:
New York
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 194 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"PropThink: Biogen Idec's BG-12 PDUFA Delay is a Buying Opportunity"
steht unter der journalistisch-redaktionellen Verantwortung von
PropThink (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
