My latest analysis of Celgene (CELG) is at Seeking Alpha:
Celgene Stock Price: Is It Bubbly?
Biogen Idec (BIIB) announced today it plans a Phase III trial for an Alzheimer's Disease (AD) therapy. I just recently wrote in Biogen Idec, PML Deaths, And Hemophilia Therapies that I was not counting any of its Alheimer's pipeline in my valuation, which was basically positive. And I'm still not.
The interim data on BIIB037, an anti-amyloid beta MAB (antibody), Phase 1b randomized, blinded, dose-escalated study, for early-stage AD, showed safety and the removal of beta amyloid from the brain. Also patients were tested for cognition and nerve function. Removal of amyloid corresponded with dose size and time of treatment. At 54 weeks the effects on cog were positive and statistically significant. The study is not even done yet.
Biogen is planning a Phase III trial, but that would be dependent on finishing the trial and permission from the FDA.
I hope this will turn out to be true and Alzheimer's patients will at last have a therapy that works, if administered early enough. However, I have seen false positive signals before, followed by failures in Phase II and Phase III trials. Some scientists question the correlation of amyloid deposits to mental deterioration. Cognitive trials tend to be subjective, even if double blinded.
I believe it is too early to get excited, but of course I will take a close look at the full data when it is published.
And, as I said in my article, if this therapy helps or prevents progression in Alzheimer's patients, the revenue and profits from it would likely eclipse anything we have seen in pharmaceutical history.
Disclosure: I own stock in both BIIB and CELG.
Showing posts with label Biogen Idec. Show all posts
Showing posts with label Biogen Idec. Show all posts
Tuesday, December 2, 2014
Thursday, November 20, 2014
Biogen Idec; Hansen Medical
I realized my expertise in Biogen Idec (BIIB) had gotten out-of-date, spent a day doing research, and wrote it up. It was published at Seeking Alpha yesterday:
Biogen Idec, PML Deaths, and Hemophilia Therapies
Writing a summary article about a large biotechnology company presents some difficulties. This article was longer than most people will read. Yet I had to be very selective about the current drugs and pipeline that I covered in any detail. There always has to be room to discuss whether the stock is at an attractive price, given the likely future path of earnings.
Checking my records, I originally bought BIIB for $61.57 on 2/6/2008, when I was first beginning to shift my attention from information technology to biotechnology. I accumulated BIIB for a while, but in 2012 sold half my holdings at $137.19, thinking the P/E had gotten too high. As you know, despite fluctuations, the general trend has tended up. As I write it is trading at $301.56. I think Biogen is again attractively priced, but it is already about 6% of my holdings, so I am just watching for now.
Hansen Medical (HNSN) is an entirely different matter. I bought some today at $0.80 per share, which is about as low as it has ever been. I have owned some since 2009, but sold some for $2.35 earlier this year. For perhaps a variety of reasons Hansen just can't seem to actually sell very many of their robotic catheter surgical machines. They keep announcing new procedures the machines can do, in particular the Magellan machine designed for peripheral vascular procedures. Today they announced the first successful use of Magellan in the U.S. to do a prostatic artery embolization procedure for Benign Prostatic Hyperplasia. Which translates to a safe and effective procedure to treat enlarged prostate glands, which affect about 75% of men by the time they reach 80 years of age. It could be big, but of course it competes with other types of surgery as well as with drugs as treatment options.
That said, if past sales of Hansen surgical robots is an indicator, even $0.80 is not cheap. But there have been lots of field tests of Magellan, so maybe Q4 will surprise us with more than token sales.
Biogen Idec, PML Deaths, and Hemophilia Therapies
Writing a summary article about a large biotechnology company presents some difficulties. This article was longer than most people will read. Yet I had to be very selective about the current drugs and pipeline that I covered in any detail. There always has to be room to discuss whether the stock is at an attractive price, given the likely future path of earnings.
Checking my records, I originally bought BIIB for $61.57 on 2/6/2008, when I was first beginning to shift my attention from information technology to biotechnology. I accumulated BIIB for a while, but in 2012 sold half my holdings at $137.19, thinking the P/E had gotten too high. As you know, despite fluctuations, the general trend has tended up. As I write it is trading at $301.56. I think Biogen is again attractively priced, but it is already about 6% of my holdings, so I am just watching for now.
Hansen Medical (HNSN) is an entirely different matter. I bought some today at $0.80 per share, which is about as low as it has ever been. I have owned some since 2009, but sold some for $2.35 earlier this year. For perhaps a variety of reasons Hansen just can't seem to actually sell very many of their robotic catheter surgical machines. They keep announcing new procedures the machines can do, in particular the Magellan machine designed for peripheral vascular procedures. Today they announced the first successful use of Magellan in the U.S. to do a prostatic artery embolization procedure for Benign Prostatic Hyperplasia. Which translates to a safe and effective procedure to treat enlarged prostate glands, which affect about 75% of men by the time they reach 80 years of age. It could be big, but of course it competes with other types of surgery as well as with drugs as treatment options.
That said, if past sales of Hansen surgical robots is an indicator, even $0.80 is not cheap. But there have been lots of field tests of Magellan, so maybe Q4 will surprise us with more than token sales.
Wednesday, October 22, 2014
Illumina spectacular EPS growth
My analysis of Illumina was published today by Seeking Alpha:
Illumina Sequences Profits
Non-GAAP diluted EPS was $0.77, up 71% y/y.
But buy in at this point? Not my cup of tea. Congratulations to those who already owned ILMN.
You can see all my Illumina notes here.
It is a busy day for me, as is tomorrow. It probably won't be until at least Friday that I can write up an analysis of Intuitive Surgical (ISRG) and Biogen Idec (BIIB). They have something in common, aside from being biotechnology companies: they left an important detail out of their press release. Which is why it is important to listen to analyst conferences and read SEC documents.
Intuitive Surgical had to withdraw its surgical stapler from the market. They gave no details except that there were 3 incidents that led to the stop, and that they are being very conservative in their approach to the issue.
Biogen Idec announced its first Tecfidera (multiple sclerosis therapy) death from PML. This recalls the time in the past when the first deaths associated with Tysabri caused a train wreck. I first bought BIIB at that time, and am glad I did. But is this a buying opportunity? It isn't the same level of train wreck. Watch here or at Seeking Alpha for my analysis.
Tomorrow I am covering quarter reports and analyst conferences by Celgene, Alexion, and Altera. A complete list of the stocks I cover, with links to my notes, is at Openicon.
Illumina Sequences Profits
Non-GAAP diluted EPS was $0.77, up 71% y/y.
But buy in at this point? Not my cup of tea. Congratulations to those who already owned ILMN.
You can see all my Illumina notes here.
It is a busy day for me, as is tomorrow. It probably won't be until at least Friday that I can write up an analysis of Intuitive Surgical (ISRG) and Biogen Idec (BIIB). They have something in common, aside from being biotechnology companies: they left an important detail out of their press release. Which is why it is important to listen to analyst conferences and read SEC documents.
Intuitive Surgical had to withdraw its surgical stapler from the market. They gave no details except that there were 3 incidents that led to the stop, and that they are being very conservative in their approach to the issue.
Biogen Idec announced its first Tecfidera (multiple sclerosis therapy) death from PML. This recalls the time in the past when the first deaths associated with Tysabri caused a train wreck. I first bought BIIB at that time, and am glad I did. But is this a buying opportunity? It isn't the same level of train wreck. Watch here or at Seeking Alpha for my analysis.
Tomorrow I am covering quarter reports and analyst conferences by Celgene, Alexion, and Altera. A complete list of the stocks I cover, with links to my notes, is at Openicon.
Wednesday, July 30, 2014
Biogen Idec long-term estimate; Amgen thoughts
I had not written about Biogen Idec (BIIB) since this article in April 2013, in which I concluded Biogen still had not completed its ascent:
Biogen Idec: Too High Too Fast?
But after listening (and taking notes on) the Biogen Idec Analyst Call Q2 2014 I decided it was worth another look. While I generally like to think of myself as a long-term investor, I will cut back or even dump a stock if I think it has become way overpriced.
Seeking Alpha accepted my article, so you can read it there (per our agreement):
Can Biogen Idec Take Wing with Tecfidera?
Meanwhile, Amgen had a good report yesterday; you can read my summary Amgen Q2 2014 results. I used to watch Amgen a few years back and thought it had sagging sales and was overpriced compared to the stocks I chose to invest in (GILD, BIIB, CELG), but last fall I took another look. Amgen by then had developed a vast pipeline and was trading at a very low P/E compared to competitors. So I bought in during the biotechnology panic this spring. There are still issues with Amgen's aging drug portfolio, but it looks like several new drugs will get approved soon and the pipeline is very, very deep.
Biogen Idec: Too High Too Fast?
But after listening (and taking notes on) the Biogen Idec Analyst Call Q2 2014 I decided it was worth another look. While I generally like to think of myself as a long-term investor, I will cut back or even dump a stock if I think it has become way overpriced.
Seeking Alpha accepted my article, so you can read it there (per our agreement):
Can Biogen Idec Take Wing with Tecfidera?
Meanwhile, Amgen had a good report yesterday; you can read my summary Amgen Q2 2014 results. I used to watch Amgen a few years back and thought it had sagging sales and was overpriced compared to the stocks I chose to invest in (GILD, BIIB, CELG), but last fall I took another look. Amgen by then had developed a vast pipeline and was trading at a very low P/E compared to competitors. So I bought in during the biotechnology panic this spring. There are still issues with Amgen's aging drug portfolio, but it looks like several new drugs will get approved soon and the pipeline is very, very deep.
Thursday, July 24, 2014
Inovio, Biogen Idec, and Gilead Sciences
Inovio got some good data, and you can read my interpretation at Seeking Alpha:
Is Inovio Undervalues after Positive HPV Therapy Results?
I've been listening to results conferences for the stocks I either own or would like to own. Two somewhat related, at least being biotechnology stocks with disease therapies, are:
Gilead Sciences (GILD) Q2 analyst conference
Gilead had outstanding results, largely based on Sovaldi, a cure for Hepatitis C. I believe Gilead should be heading to $180 or so a share. I'm not sure whose selling at $90, maybe people who bought way back when at $5 and have to reallocate, but probably people with some hope that some other drug will knock out Sovaldi, a hope that will be crushed as we move through the quarters. Gilead is generating so much cash it can use for buy backs, fighting that tide is the height of folly.
Biogen Idec (BIIB) Q2 analyst conference
Biogen has been performing great and raised guidance. In this case the stock did go up substantially following the report. It is not a cheap stock, but if you look down the road, it is highly likely to keep up a rapid pace of profit growth for years to come.
Is Inovio Undervalues after Positive HPV Therapy Results?
I've been listening to results conferences for the stocks I either own or would like to own. Two somewhat related, at least being biotechnology stocks with disease therapies, are:
Gilead Sciences (GILD) Q2 analyst conference
Gilead had outstanding results, largely based on Sovaldi, a cure for Hepatitis C. I believe Gilead should be heading to $180 or so a share. I'm not sure whose selling at $90, maybe people who bought way back when at $5 and have to reallocate, but probably people with some hope that some other drug will knock out Sovaldi, a hope that will be crushed as we move through the quarters. Gilead is generating so much cash it can use for buy backs, fighting that tide is the height of folly.
Biogen Idec (BIIB) Q2 analyst conference
Biogen has been performing great and raised guidance. In this case the stock did go up substantially following the report. It is not a cheap stock, but if you look down the road, it is highly likely to keep up a rapid pace of profit growth for years to come.
Tuesday, July 22, 2014
Earnings Tuesday, Wednesday: ISRG, XLNX, BIIB, GILD, ILMN
For the stocks I follow this is a big week of earnings reports. Last week I just had AMD and Seagate (STX) report, and both disappointed by being at average public estimates of analysts.
Intuitive Surgical is first up, holding its analyst conference at 1:30 today. ISRG has been having trouble keeping up the prior pace of its surgical robot sales. But a miss today followed by a stock plunge would present a buying opportunity. ISRG used to have a sky-high P/E, but now it is reasonable, and in the long run I believe surgical robots remain promising.
Xilinx (XLNX) will report at 2:00 PM. Xilinx occupies an obscure but important part of the semiconductor industry. It will be interesting to see how demand was in Q2.
Tomorrow I will be covering Biogen Idec (BIIB) early in the morning. BIIB has been a big winner for me over the last decade. I have no particular expectations for tomorrow, but I will look for anything that might change my long-term model.
Gilead (GILD) is probably the most-followed stock that will report tomorrow, at 1:30 PM. Everyone wants to know how much Sovaldi was sold in the quarter. But watch the HIV, heart and cancer franchises too. I remain very bullish on Gilead in the long run, however any individual quarter sorts out.
And last on my list is Illumina (ILMN), the maker of DNA analysis machines. Again, it will be interesting to see how the quarter went, but that should not have much effect on the long run.
You can read my analyst conference summaries and find links to my articles at Seeking Alpha at the page listing the companies I cover at OpenIcon. Links above go the my pages for the individual companies.
Disclosure: at the time this article was written I owned AMD, XLNX, BIIB, and GILD stock. I did not own the other stocks mentioned, but I am always looking at a good price point to by stocks, and reserve the right to buy them at any time. I am an investor, financial researcher and writer, not a financial advisor, so nothing in this article should be construed as advice or anything other than an opinion.
Intuitive Surgical is first up, holding its analyst conference at 1:30 today. ISRG has been having trouble keeping up the prior pace of its surgical robot sales. But a miss today followed by a stock plunge would present a buying opportunity. ISRG used to have a sky-high P/E, but now it is reasonable, and in the long run I believe surgical robots remain promising.
Xilinx (XLNX) will report at 2:00 PM. Xilinx occupies an obscure but important part of the semiconductor industry. It will be interesting to see how demand was in Q2.
Tomorrow I will be covering Biogen Idec (BIIB) early in the morning. BIIB has been a big winner for me over the last decade. I have no particular expectations for tomorrow, but I will look for anything that might change my long-term model.
Gilead (GILD) is probably the most-followed stock that will report tomorrow, at 1:30 PM. Everyone wants to know how much Sovaldi was sold in the quarter. But watch the HIV, heart and cancer franchises too. I remain very bullish on Gilead in the long run, however any individual quarter sorts out.
And last on my list is Illumina (ILMN), the maker of DNA analysis machines. Again, it will be interesting to see how the quarter went, but that should not have much effect on the long run.
You can read my analyst conference summaries and find links to my articles at Seeking Alpha at the page listing the companies I cover at OpenIcon. Links above go the my pages for the individual companies.
Disclosure: at the time this article was written I owned AMD, XLNX, BIIB, and GILD stock. I did not own the other stocks mentioned, but I am always looking at a good price point to by stocks, and reserve the right to buy them at any time. I am an investor, financial researcher and writer, not a financial advisor, so nothing in this article should be construed as advice or anything other than an opinion.
Friday, January 31, 2014
Illumina, Biogen Idec, Vertex, Celgene and Alexion Analyst Call notes
I listened to the analyst conference calls and posted my notes at OpenIcon for the following biotechnology companies that reported earlier this week (follow links for details):
Illumina
Biogen Idec
Vertex
Celgene
Alexion
Of these stocks, I already own Biogen Idec (BIIB) and Celgene (CELG). Illumina and Alexion are doing very well, but I am put off by their prices.
Vertex (VRTX) is not doing well at all, and is overpriced. It's Hepatitis C therapy is being wiped out of the market by newer drugs. It has a pipeline of potential candidates, but is priced as if they were guaranteed approval by the FDA. As is often the case, this is a good company, but with Wall Street firms supporting the price and pushing it to investors, it is way overpriced. I don't short stocks, but if I did Vertex would be on my short list.
Keep diversified!
Illumina
Biogen Idec
Vertex
Celgene
Alexion
Of these stocks, I already own Biogen Idec (BIIB) and Celgene (CELG). Illumina and Alexion are doing very well, but I am put off by their prices.
Vertex (VRTX) is not doing well at all, and is overpriced. It's Hepatitis C therapy is being wiped out of the market by newer drugs. It has a pipeline of potential candidates, but is priced as if they were guaranteed approval by the FDA. As is often the case, this is a good company, but with Wall Street firms supporting the price and pushing it to investors, it is way overpriced. I don't short stocks, but if I did Vertex would be on my short list.
Keep diversified!
Monday, January 6, 2014
Not so great 2013? A look at the IBB biotechnology index
I thought I beat the market rather nicely in 2013, with a 79% return (see My Great 2013 stock investments). But it turns out that the Nasdaq Biotechnology Index (IBB) closed at 2013 at 227.06 and closed out 2012 at 137.22, for a return of 65.5%. I would say my non-biotech stocks dragged down my portfolio a bit, but my three worst-performing stocks were all biotechs.
While I did beat the IBB, I did not do so by much. Not enough to claim that it was anything outside the normal probability distribution. Many of my biotechs are in the IBB, and some of them account for a lot of market capitalization within the IBB.
So maybe I should save myself some trouble and just buy the IBB. The argument against that can be summed up in my best performing biotech stock in 2013: Inovio, up 530%. INO is not in the IBB.
There are 128 companies in the IBB, and like most indexes they are updated in a way that tends to mask failures. On the other hand one of my worst performers was Dendreon (DNDN) and it is still on the list.
But I will think about adding the IBB as a part of my portfolio. That way if some tiny company gets an unexpectedly good trial result or FDA approval, I'll catch part of it. Along with the companies that have powerful backers on Wall Street, until their innovative therapies fail and investors loose their billions.
Probably I will just keep digging through the data, looking for potential that the sharks have missed. I don't mind the time; science is a hobby of mine. Some times that potential is in fairly large cap companies, not just in the little guys with no approved therapy yet. I first bought Gilead (GILD) in 2007, then Celgene (CELG), Onyx (ONXX) and Biogen (BIIB) in 2008. It took a while for those investments to work out, but my strategy was a long-term one. As far as I am concerned, it beat day trading.
Goldman Sachs pontificated today that biotechnology stocks are generally overvalued. I take a conservative approach to investing, but I look for long term value in product pipelines. I don't know where GILD, BIIB, and CELG will be in a year, but in 5 years they are highly likely to be much more valuable than today [barring the zombie apocalypse, in which case all bets are off].
While I did beat the IBB, I did not do so by much. Not enough to claim that it was anything outside the normal probability distribution. Many of my biotechs are in the IBB, and some of them account for a lot of market capitalization within the IBB.
So maybe I should save myself some trouble and just buy the IBB. The argument against that can be summed up in my best performing biotech stock in 2013: Inovio, up 530%. INO is not in the IBB.
There are 128 companies in the IBB, and like most indexes they are updated in a way that tends to mask failures. On the other hand one of my worst performers was Dendreon (DNDN) and it is still on the list.
But I will think about adding the IBB as a part of my portfolio. That way if some tiny company gets an unexpectedly good trial result or FDA approval, I'll catch part of it. Along with the companies that have powerful backers on Wall Street, until their innovative therapies fail and investors loose their billions.
Probably I will just keep digging through the data, looking for potential that the sharks have missed. I don't mind the time; science is a hobby of mine. Some times that potential is in fairly large cap companies, not just in the little guys with no approved therapy yet. I first bought Gilead (GILD) in 2007, then Celgene (CELG), Onyx (ONXX) and Biogen (BIIB) in 2008. It took a while for those investments to work out, but my strategy was a long-term one. As far as I am concerned, it beat day trading.
Goldman Sachs pontificated today that biotechnology stocks are generally overvalued. I take a conservative approach to investing, but I look for long term value in product pipelines. I don't know where GILD, BIIB, and CELG will be in a year, but in 5 years they are highly likely to be much more valuable than today [barring the zombie apocalypse, in which case all bets are off].
Tuesday, October 29, 2013
Agenus, Biogen Idec, Seagate and Vertex Q3 results and calls
You can look at my notes on September quarter results and analyst calls from Agenus (AGEN) , Biogen Idec (BIIB), Seagate (STX) and Vertex (VRTX) if you like:
Agenus Q3 analyst call
Biogen Idec Q3 analyst call
Seagate Q3 analyst call
Vertex Q3 analyst call
I don't own any Vertex stock. I have owned Biogen Idec stock since 2008. I have owned Seagate stock since June 2012.
This is my first coverage of Agenus. I bought a small initial amount of AGEN in September and bought a like amount this morning. Agenus is a development-stage biotechnology stock, with no regular income source, though it has received some revenue from achieved milestones at partners. It should be considered a very risky investment. I hope to write up Agenus at Seeking Alpha very soon (I finished my Microsoft project, but got behind on so many things during it ...)
This afternoon I will be taking notes on Gilead, a company I have owned since 2007. I'm going to post the link even though no data is there yet:
Gilead Q3 analyst call
Keep in mind that anyone can listen to the analyst call of traded companies. Usually only buy-side (Wall Street) analysts can ask questions. You can listen by telephone or by web streaming. I always listen to at least one conference before buying a stock. The notes I post contain what is important to me, and can be read it a minute or two, but are not really meant to substitute for the full conference.
Agenus Q3 analyst call
Biogen Idec Q3 analyst call
Seagate Q3 analyst call
Vertex Q3 analyst call
I don't own any Vertex stock. I have owned Biogen Idec stock since 2008. I have owned Seagate stock since June 2012.
This is my first coverage of Agenus. I bought a small initial amount of AGEN in September and bought a like amount this morning. Agenus is a development-stage biotechnology stock, with no regular income source, though it has received some revenue from achieved milestones at partners. It should be considered a very risky investment. I hope to write up Agenus at Seeking Alpha very soon (I finished my Microsoft project, but got behind on so many things during it ...)
This afternoon I will be taking notes on Gilead, a company I have owned since 2007. I'm going to post the link even though no data is there yet:
Gilead Q3 analyst call
Keep in mind that anyone can listen to the analyst call of traded companies. Usually only buy-side (Wall Street) analysts can ask questions. You can listen by telephone or by web streaming. I always listen to at least one conference before buying a stock. The notes I post contain what is important to me, and can be read it a minute or two, but are not really meant to substitute for the full conference.
Friday, August 2, 2013
Biogen Idec (BIIB) Runs Up
I submitted an article to Seeking Alpha yesterday, in favor of Biogen Idec, and the stock ran up substantially this morning before my article was released around 11 AM Pacific Time. I own some BIIB. I just want to say that the editorial turnaround time was within normal limits, and other articles have appeared elsewhere that are also positive on BIIB, during the last few days.
My article:
Biogen Idec Product Pipeline will Propel it Higher
Don't ignore the risks, even when the upside dominates: keep diversified!
My article:
Biogen Idec Product Pipeline will Propel it Higher
Don't ignore the risks, even when the upside dominates: keep diversified!
Wednesday, July 31, 2013
Hansen Medical, Gilead Sciences, and Biogen Idec
Well I'm having a good day, with Hansen Medical (HNSN) up almost $0.22 to $1.45 at the moment, and Inovio (INO) up $0.21 to 2.08. These were minor positions for me given their risks, but large percentage moves can turn a minor position into a major one, which is why I am always looking for good micro-cap stocks, but never have more than 3 or 4 in my portfolio.
Hansen has actually been doing quite badly until today. I was going to write an article "Hansen still has a pulse" based on preliminary Q2 results in which they again sold only a couple of robotic surgery systems. But today they got a very large cash infusion, showing some powerful investors believe sales are just around the corner, or that Philips or Intuitive Surgical or someone might buy the company for its IP.
Overnight the editors at Seeking Alpha posted my Gilead Sciences Hepatitis C Approval May Be Factored In. I sound wishy-washy in giving a value to Gilead or dissing it or recommending it, but that is because no one knows where the price will be set for the new therapies. The execs at Gilead probably have some ideas, but they are not talking. And they should not, until they get FDA approval. When they announce prices to the medical community the stock price will adjust accordingly as all we analysts plug the therapy price into our spreadsheets. As a citizen I hope the price is low, because the government (we taxpayers) will be footing the bill. As an investor, not so much. In any case actually having a cure (for most patients) is going to cut down on the long-term costs from hepatitis C damage. Then again, if you don't die of liver failure you have to die of something, and whatever it is the doctors and pharmaceutical companies will want to get what they can out of that tragedy.
I still hope to get to Biogen Idec today. This afternoon Microchip (MCHP) will be reporting, so I'll be taking and posting notes on that conference.
Hansen has actually been doing quite badly until today. I was going to write an article "Hansen still has a pulse" based on preliminary Q2 results in which they again sold only a couple of robotic surgery systems. But today they got a very large cash infusion, showing some powerful investors believe sales are just around the corner, or that Philips or Intuitive Surgical or someone might buy the company for its IP.
Overnight the editors at Seeking Alpha posted my Gilead Sciences Hepatitis C Approval May Be Factored In. I sound wishy-washy in giving a value to Gilead or dissing it or recommending it, but that is because no one knows where the price will be set for the new therapies. The execs at Gilead probably have some ideas, but they are not talking. And they should not, until they get FDA approval. When they announce prices to the medical community the stock price will adjust accordingly as all we analysts plug the therapy price into our spreadsheets. As a citizen I hope the price is low, because the government (we taxpayers) will be footing the bill. As an investor, not so much. In any case actually having a cure (for most patients) is going to cut down on the long-term costs from hepatitis C damage. Then again, if you don't die of liver failure you have to die of something, and whatever it is the doctors and pharmaceutical companies will want to get what they can out of that tragedy.
I still hope to get to Biogen Idec today. This afternoon Microchip (MCHP) will be reporting, so I'll be taking and posting notes on that conference.
Tuesday, July 30, 2013
New Celgene (CELG) article
I have a new article published today at Seeking Alpha:
Celgene Up Over 100% in a Year. Still a Buy?
I also have an article under editorial review on Gilead (GILD).
Today I hope to write up my thoughts on Biogen Idec as well.
On the whole Celgene, Biogen, and Gilead, plus Onyx Pharmaceutical, have been my best investment segment. Buying them goes back to the time I wrote:
Choosing a Biotechnology Stock
Which, while the specifics have changed, still gives some good tips on what tips to look for if you want to choose individual stocks instead of a biotechnology fund.
Celgene Up Over 100% in a Year. Still a Buy?
I also have an article under editorial review on Gilead (GILD).
Today I hope to write up my thoughts on Biogen Idec as well.
On the whole Celgene, Biogen, and Gilead, plus Onyx Pharmaceutical, have been my best investment segment. Buying them goes back to the time I wrote:
Choosing a Biotechnology Stock
Which, while the specifics have changed, still gives some good tips on what tips to look for if you want to choose individual stocks instead of a biotechnology fund.
Thursday, July 25, 2013
Gilead Sciences and Biogen Idec analyst call summaries posted
I have now posted my notes on two more calls:
Gilead Sciences (GILD) Q2 2013 analyst call
Biogen Idec (BIIB) Q2 2013 analyst call
Gilead Sciences (GILD) Q2 2013 analyst call
Biogen Idec (BIIB) Q2 2013 analyst call
Tuesday, April 30, 2013
Biogen Idec Too High Too Fast?
Biogen Idec (BIIB) is now off its 52-week high of $226.18 (reached earlier today) but up from a 52 week low of $126.39 (of June 4, 2012). At $218.84 it has risen 73% off the low.
I began following BIIB in the first quarter of 2006, but did not acquire stock until February 2008, when I picked it up at $61.57 per share. In the short run I overpaid, but I picked up more later that year at $46.97. I person with perfect timing could have picked up shares at $40.27 on November 28, 2008. Biogen then rose to $67.05 by the end of 2010, and looks like it invented an anti-gravity machine this January.
Biogen did so well that it became too large a percentage of my portfolio (according to my portfolio rules) so I sold half of my position on May 16, 2012 for $137.19. Now of course I wish I had violated my portfolio rules and kept the stock longer, but I had other situations where those same rules kept me out of major trouble (they were the main reason I sold most of my Dendreon stake before the price collapsed).
Even though my remaining Biogen stake is well within my portfolio rules I have to ask: is BIIB overpriced? Should I sell it and look for a better value proposition?
There were reasons Biogen was priced where it was in 2008 through 2010, the big one being a disease called PML (progressive multifocal leukoencephalopathy) caused by the JVC virus. Biogen's specialty is multiple sclerosis MS therapies. Its Avonex was the most prescribed MS therapy, but the new wonder drug was supposed to be Tysabri. MS is an autoimmune disease; MS therapies work by selectively suppressing the immune system. Turned out, the JVC virus lurks in the brains of about 1/2 the population, generally doing no harm except when the immune system collapses, when it causes PML, and often results in death.
Tysabri use led to some PML cases, and in a few instances to death. Not knowing what the rate was, nor what treatment could be given for PML, the FDA revoked Tysabri's marketing license. The immediate solution turned out to be to monitor for PML and stop giving Tysabri if there were symptoms. The FDA re-approved Tysabri provided a monitoring program was in place. While Tysabri was so effective that sales ramped back up substantially, naturally there was concern by doctors, patients, and investors that we might see more PML deaths and a permanent ban on Tysabri.
Nevertheless in Q1 2008 Tysabri sales were $115 million, total Biogen revenue was $942 million, and GAAP EPS was $0.54. It being the recession, investors were risk-adverse, and it seemed no amount of good news on Tysabri, revenue, or profit could do much for the stock until late 2010.
So much of the run up in the price was just investors catching up to the new reality: a highly-profitable biotechnology company with a strong pipeline of potential future blockbusters. But in the same way investors lagged reality before 2011, perhaps so many momentum players have jumped on the BIIB bandwagon that the stock has gotten ahead of its fair valuation.
By the beginning of 2013 we had pre-screening for JVC and better treatments for PML, reducing the risk of PML mortality to statistically close to zero. We have substantial Fampyra revenues, though that therapy had also had its issues.
Plegridy (peginterferon beta-1a) for relapsing MS pivotal Phase III data has met all primary and secondary endpoints after 1 year cutoff of a two-year study. Biogen expects to file with FDA and EMA (Europe) by mid-2013
Daclizumab-HYP Phase III data readout expected in 2014. It is also for relapsing forms of MS.
Biogen also filed for approval with FDA for Hemophilia Factor 8 for A and 9 for B, based on significant Phase III trial results.
A number of other therapies are in Phase I, II, or III trials. See the Biogen-Idec product pipeline for more details.
So we can figure that the most likely scenario is that Biogen Idec will see substantial revenue and profit growth over the next few years and new therapies come to market. It is unlikely that everything in the pipeline will get good results and FDA approval, but Biogen has a lot of shots on goal.
You can build spreadsheets (and I have, and sell-side analysts certainly do) guessing at revenue and profits from future therapies based on patient populations, competing therapies, and guesses about pricing. But experienced pharmacology and biotechnology investors know that promising therapies often fail, and unexpected side effects can show up even after FDA approval. Picking winners of competitive races is also more guesswork than science.
So a good hard look at the latest quarter should keep us anchored in reality, and then some P/E ratio points can be added to reflect optimism about profit growth in the next few years; add as many points as you are comfortable with.
Biogen reported on the first quarter of 2013 last Thursday. Revenue of $1.415 billion was up 9.5% from Q1 2012, which is quite good and means a fair P/E ratio should be above the market average. GAAP EPS was $1.79, up 43% y/y; now that should be worth some a P/E ratio well above market. Ballpark it at 30 to 1.
Guidance is for 2013 GAAP EPS of $6.69 to $6.90. Given that non-GAAP guidance is $7.80 to $7.90, let's use $7.00 and multiply by 30. That gives us $210 per share, not much off today's auction price.
So my ballpark estimation is that even at this price BIIB is still a good value. Included in the price are estimated 2013 profits. The pipeline of new drugs revenue and profits won't kick in substantially until 2014. I would expect BIIB to end 2014 in a higher price band, depending on the details of new product ramps.
I am inclined to hold my BIIB and, if I need to sell stock because I spot another opportunity as good as Biogen was in 2008, I could probably find something else to sell. Most likely I will leave BIIB off the leash until it again becomes a risk management problem from being too large a percentage of my portfolio. If I am wrong and it falls in the short run, or becomes a smaller percentage of my portfolio again because something else runs up, I might even buy more.
Keep diversified!
Disclaimer: I own share of BIIB and reserve the right to sell them or buy more at any time, even though I currently have no plans to change my position.
See also:
My Biogen Idec main analyst conferences page.
My BIIB Q1 2013 conference notes
www.biogenidec.com
I began following BIIB in the first quarter of 2006, but did not acquire stock until February 2008, when I picked it up at $61.57 per share. In the short run I overpaid, but I picked up more later that year at $46.97. I person with perfect timing could have picked up shares at $40.27 on November 28, 2008. Biogen then rose to $67.05 by the end of 2010, and looks like it invented an anti-gravity machine this January.
Biogen did so well that it became too large a percentage of my portfolio (according to my portfolio rules) so I sold half of my position on May 16, 2012 for $137.19. Now of course I wish I had violated my portfolio rules and kept the stock longer, but I had other situations where those same rules kept me out of major trouble (they were the main reason I sold most of my Dendreon stake before the price collapsed).
Even though my remaining Biogen stake is well within my portfolio rules I have to ask: is BIIB overpriced? Should I sell it and look for a better value proposition?
There were reasons Biogen was priced where it was in 2008 through 2010, the big one being a disease called PML (progressive multifocal leukoencephalopathy) caused by the JVC virus. Biogen's specialty is multiple sclerosis MS therapies. Its Avonex was the most prescribed MS therapy, but the new wonder drug was supposed to be Tysabri. MS is an autoimmune disease; MS therapies work by selectively suppressing the immune system. Turned out, the JVC virus lurks in the brains of about 1/2 the population, generally doing no harm except when the immune system collapses, when it causes PML, and often results in death.
Tysabri use led to some PML cases, and in a few instances to death. Not knowing what the rate was, nor what treatment could be given for PML, the FDA revoked Tysabri's marketing license. The immediate solution turned out to be to monitor for PML and stop giving Tysabri if there were symptoms. The FDA re-approved Tysabri provided a monitoring program was in place. While Tysabri was so effective that sales ramped back up substantially, naturally there was concern by doctors, patients, and investors that we might see more PML deaths and a permanent ban on Tysabri.
Nevertheless in Q1 2008 Tysabri sales were $115 million, total Biogen revenue was $942 million, and GAAP EPS was $0.54. It being the recession, investors were risk-adverse, and it seemed no amount of good news on Tysabri, revenue, or profit could do much for the stock until late 2010.
So much of the run up in the price was just investors catching up to the new reality: a highly-profitable biotechnology company with a strong pipeline of potential future blockbusters. But in the same way investors lagged reality before 2011, perhaps so many momentum players have jumped on the BIIB bandwagon that the stock has gotten ahead of its fair valuation.
By the beginning of 2013 we had pre-screening for JVC and better treatments for PML, reducing the risk of PML mortality to statistically close to zero. We have substantial Fampyra revenues, though that therapy had also had its issues.
Plegridy (peginterferon beta-1a) for relapsing MS pivotal Phase III data has met all primary and secondary endpoints after 1 year cutoff of a two-year study. Biogen expects to file with FDA and EMA (Europe) by mid-2013
Daclizumab-HYP Phase III data readout expected in 2014. It is also for relapsing forms of MS.
Biogen also filed for approval with FDA for Hemophilia Factor 8 for A and 9 for B, based on significant Phase III trial results.
A number of other therapies are in Phase I, II, or III trials. See the Biogen-Idec product pipeline for more details.
So we can figure that the most likely scenario is that Biogen Idec will see substantial revenue and profit growth over the next few years and new therapies come to market. It is unlikely that everything in the pipeline will get good results and FDA approval, but Biogen has a lot of shots on goal.
You can build spreadsheets (and I have, and sell-side analysts certainly do) guessing at revenue and profits from future therapies based on patient populations, competing therapies, and guesses about pricing. But experienced pharmacology and biotechnology investors know that promising therapies often fail, and unexpected side effects can show up even after FDA approval. Picking winners of competitive races is also more guesswork than science.
So a good hard look at the latest quarter should keep us anchored in reality, and then some P/E ratio points can be added to reflect optimism about profit growth in the next few years; add as many points as you are comfortable with.
Biogen reported on the first quarter of 2013 last Thursday. Revenue of $1.415 billion was up 9.5% from Q1 2012, which is quite good and means a fair P/E ratio should be above the market average. GAAP EPS was $1.79, up 43% y/y; now that should be worth some a P/E ratio well above market. Ballpark it at 30 to 1.
Guidance is for 2013 GAAP EPS of $6.69 to $6.90. Given that non-GAAP guidance is $7.80 to $7.90, let's use $7.00 and multiply by 30. That gives us $210 per share, not much off today's auction price.
So my ballpark estimation is that even at this price BIIB is still a good value. Included in the price are estimated 2013 profits. The pipeline of new drugs revenue and profits won't kick in substantially until 2014. I would expect BIIB to end 2014 in a higher price band, depending on the details of new product ramps.
I am inclined to hold my BIIB and, if I need to sell stock because I spot another opportunity as good as Biogen was in 2008, I could probably find something else to sell. Most likely I will leave BIIB off the leash until it again becomes a risk management problem from being too large a percentage of my portfolio. If I am wrong and it falls in the short run, or becomes a smaller percentage of my portfolio again because something else runs up, I might even buy more.
Keep diversified!
Disclaimer: I own share of BIIB and reserve the right to sell them or buy more at any time, even though I currently have no plans to change my position.
See also:
My Biogen Idec main analyst conferences page.
My BIIB Q1 2013 conference notes
www.biogenidec.com
Monday, August 13, 2012
3 NASDAQ 100 Biotechs: Gilead, Celgene, Biogen Idec
When I wrote about Gilead Sciences (GILD), on July 26, 2011, I said "A convergence of factors is driving Gilead profits higher. This trend should accelerate in 2012 and continue through at least 2015." [See Gilead Sciences Readies Pipeline]. Gilead stock that day closed at $42.16. This morning GILD opened at $56.42. While I am a long-term investor, it is encouraging to see these short-term results.
The forward-looking story is now largely about curing Hepatitis C and refreshing Gilead's market-dominating anti-HIV franchise, but first the backward-looking numbers.
In Q2 revenue was $2.41 billion, up 6% sequentially from $2.28 billion and up 13% from $2.14 billion in the year-earlier quarter. GAAP net income was $711.6 million, up 61% sequentially from $442.0 million, but down 5% from $746.2 million in the year-earlier quarter. GAAP earnings per share (EPS) were $0.91, up 60% sequentially from $0.57, but down 2% from $0.93 year-earlier. Eliminating one-time and non-cash items, Non-GAAP EPS was $0.99, up 9% sequentially from $0.91, but down 1% from $1.00 year-earlier.
The y/y EPS showing may make you wonder why the stock is up so much. Bringing the new HIV drugs to the FDA and the hepatitis drugs through clinical trials is adding to expenses. The price of the stock had been beaten down because of fears of expiring patents. The increased revenue promises a healthy dose of future profits since it now appears the HIV franchise will remain strong and hep c revenues may kick in as early as 2014. Recent Phase II hep c trials have been encouraging. The goal is to have a multi-agent, highly effective once-a-day tablet that will completely cure hepatitis C over a reasonably short period of time.
Gilead's P/E Ratio? Just over 17. It's a bargain.
Celgene (CELG) also is generating healthy profits while getting ready to introduce blockbuster therapies over the next few years.
Celgene Q2 revenue was $1.37 billion, up 8% sequentially from $1.27 million and up 16% from $1.18 billion year-earlier. GAAP net income was $367.4 million, down 8% sequentially from $401.5 million but up 32% from $279.2 million year-earlier. GAAP EPS (earnings per share) were $0.82, down 9% sequentially from $0.90, but up 39% from $0.59 year-earlier.
With a 39% y/y growth in GAAP EPS, you might think Celgene would be flying with a higher P/E ratio. Is is just GAAP accounting? No, non-GAAP EPS in Q2 was $1.22, up 13% sequentially from $1.08 and up 37% from $0.89 year-earlier.
Celgene closed a bit down today at $71.85, but a year ago it was selling for under $55. Its P/E Ratio is near 21.
The two new Celgene drugs that could produce revenue in 2013 are Pomalidomide for relapsed and refractory multiple myeloma and Apremilast for psoriatic arthritis and psoriasis. Safety and efficacy look good for both drugs, but there is always a chance that the FDA will disapprove or cause delays by asking for more clinical data.
Biogen Idec has already proven itself to be one of the big winners of late.
Biogen (BIIB) closed today at $144.54. In 2010 you could have bought it in the fifties most of the year. It has a higher P/E Ratio than Celgene or Gilead at just over 26.
So is BIIB more of a product for profit taking? [Disclaimer: I did already take some profits on this one, but it's gone up since then.]
Q2 revenue was $1.421 billion, up 10% sequentially from $1.292 billion and up 17.5% from $1.209 billion in the year-earlier quarter. GAAP net income was $386.8 million, up 28% sequentially from $302.7 million and up 34% from $288.0 million year-earlier. GAAP EPS (earnings per share) were $1.61, up 29% sequentially from $1.25 and up 36% from $1.18 year-earlier.
That alone would seem to justify the P/E, but like Celgene and Gilead, Biogen has a pipeline that could mint money for investors. The first one coming up for an FDA decision is BG-12 (dimethyl fumarate), an oral therapy for multiple sclerosis. The data looks good and a positive FDA decision would mean a commercial launch this year.
While each of these stocks has its risks, as a group they have a large number of profitable drugs and a large number of therapies in their pipelines. Holding all three minimizes risk. They are all in the NASDAQ 100.
Keep Diversified!
Disclaimer: I am a long-term investor in Gilead Sciences, Celgene, and Biogen Idec. I will not trade in the stock for a week from today.
See also:
my Gilead Sciences Q2 2012 analyst call summary
Celgene Q2 2012 analyst call summary
Biogen Idec Q2 2012 analyst call summary
The forward-looking story is now largely about curing Hepatitis C and refreshing Gilead's market-dominating anti-HIV franchise, but first the backward-looking numbers.
In Q2 revenue was $2.41 billion, up 6% sequentially from $2.28 billion and up 13% from $2.14 billion in the year-earlier quarter. GAAP net income was $711.6 million, up 61% sequentially from $442.0 million, but down 5% from $746.2 million in the year-earlier quarter. GAAP earnings per share (EPS) were $0.91, up 60% sequentially from $0.57, but down 2% from $0.93 year-earlier. Eliminating one-time and non-cash items, Non-GAAP EPS was $0.99, up 9% sequentially from $0.91, but down 1% from $1.00 year-earlier.
The y/y EPS showing may make you wonder why the stock is up so much. Bringing the new HIV drugs to the FDA and the hepatitis drugs through clinical trials is adding to expenses. The price of the stock had been beaten down because of fears of expiring patents. The increased revenue promises a healthy dose of future profits since it now appears the HIV franchise will remain strong and hep c revenues may kick in as early as 2014. Recent Phase II hep c trials have been encouraging. The goal is to have a multi-agent, highly effective once-a-day tablet that will completely cure hepatitis C over a reasonably short period of time.
Gilead's P/E Ratio? Just over 17. It's a bargain.
Celgene (CELG) also is generating healthy profits while getting ready to introduce blockbuster therapies over the next few years.
Celgene Q2 revenue was $1.37 billion, up 8% sequentially from $1.27 million and up 16% from $1.18 billion year-earlier. GAAP net income was $367.4 million, down 8% sequentially from $401.5 million but up 32% from $279.2 million year-earlier. GAAP EPS (earnings per share) were $0.82, down 9% sequentially from $0.90, but up 39% from $0.59 year-earlier.
With a 39% y/y growth in GAAP EPS, you might think Celgene would be flying with a higher P/E ratio. Is is just GAAP accounting? No, non-GAAP EPS in Q2 was $1.22, up 13% sequentially from $1.08 and up 37% from $0.89 year-earlier.
Celgene closed a bit down today at $71.85, but a year ago it was selling for under $55. Its P/E Ratio is near 21.
The two new Celgene drugs that could produce revenue in 2013 are Pomalidomide for relapsed and refractory multiple myeloma and Apremilast for psoriatic arthritis and psoriasis. Safety and efficacy look good for both drugs, but there is always a chance that the FDA will disapprove or cause delays by asking for more clinical data.
Biogen Idec has already proven itself to be one of the big winners of late.
Biogen (BIIB) closed today at $144.54. In 2010 you could have bought it in the fifties most of the year. It has a higher P/E Ratio than Celgene or Gilead at just over 26.
So is BIIB more of a product for profit taking? [Disclaimer: I did already take some profits on this one, but it's gone up since then.]
Q2 revenue was $1.421 billion, up 10% sequentially from $1.292 billion and up 17.5% from $1.209 billion in the year-earlier quarter. GAAP net income was $386.8 million, up 28% sequentially from $302.7 million and up 34% from $288.0 million year-earlier. GAAP EPS (earnings per share) were $1.61, up 29% sequentially from $1.25 and up 36% from $1.18 year-earlier.
That alone would seem to justify the P/E, but like Celgene and Gilead, Biogen has a pipeline that could mint money for investors. The first one coming up for an FDA decision is BG-12 (dimethyl fumarate), an oral therapy for multiple sclerosis. The data looks good and a positive FDA decision would mean a commercial launch this year.
While each of these stocks has its risks, as a group they have a large number of profitable drugs and a large number of therapies in their pipelines. Holding all three minimizes risk. They are all in the NASDAQ 100.
Keep Diversified!
Disclaimer: I am a long-term investor in Gilead Sciences, Celgene, and Biogen Idec. I will not trade in the stock for a week from today.
See also:
my Gilead Sciences Q2 2012 analyst call summary
Celgene Q2 2012 analyst call summary
Biogen Idec Q2 2012 analyst call summary
Wednesday, November 2, 2011
Biogen Idec: Q3 Clues to Value
When I wrote "Biogen Idec PML Test Approved in Europe, Changing Tysabri Outlook" on March 15, 2011, the price per share of BIIB was $69.56. When I wrote "Biogen Idec, Is there more Value?" on July 11, 2011, it closed at $105.53, having backed off its recent 52 week high of $109.63. Quite a run. It is headed up today after closing at $114.23 yesterday, so at least those wise people who are in the stock market these days think the answer is yes, there is still more value to be had from Biogen.
So, the eternal investor questions: did something change? Does the run up reflect value that was already there back in March? Could this be another momentum run unjustified by fundamentals? Could there be even more value in the stock?
We have had a number of recent data points to inform our views. BG-12, an oral agent for multiple sclerosis (MS), produced Phase III clinical results that should gain marketing approval from the FDA (of course, there is no guarantee of that). Biogen is generally held to sell the most effective MS drugs, but recently Gilenya by Novartis, became the first oral agent on the market.
In addition Daclizumab HYP showed good Phase 2b trial results. Dexpramipexole for Lou Gehrig's (ALS) disease Phase III trial became fully enrolled recently.
Third quarter (Q3) results released on October 28, along with the analyst conference call, demonstrated that current therapies are still ramping revenues. Biogen Idec's two multiple sclerosis (MS) blockbuster drugs are Avonex, with revenues in Q3 of $682 million, up 6% y/y, and Tysabri, with revenues of $277 million, up 26% y/y. Avonex has been around a long time and dominates the market, but its sales had flattened until the PEN was recently introduced, which makes administering it much easier. On June 22 Biogen had announced the EU approved including JCV status as a risk factor for Tysabri, which we presumed would happen in March. The risk of death or severe injury from PML, a result of JCV getting out of control when immune responses are suppressed (immune responses are the cause of MS), had been a big problem for Biogen. Now patients can test to find out if they are infected with JCV or not and with the help of their doctors make appropriate decisions about the risks versus the benefits of Tysabri.
Given all this good news and the big run up in 2011, are we at a just-right stock price? Of course next year's price will depend on how revenues and profits ramp (or don't) in 2012, and what the outlook looks like for 2013.
I will be surprised if Tysabri revenue growth does not accelerate in the second half of 2012 if BG-12 comes online. I am would not sell the stock in the current price band, and believe BIIB is currently a good bet for new money. However, in aside to the usual macroeconomic and stock market risks, all therapies run some risk from new adverse reactions being discovered and from current and future competing products.
At this point Biogen pays no dividend, but is certainly a profitable enough company that it could. It would also show management's confidence in the company's future. They spend a lot on R&D, over $300 million (GAAP) in Q3, and have a lot of cash, $2.9 billion, and a lot of non-GAAP net income, $395 million in Q3. They do use cash for stock buy backs and to acquire promissing pipeline candidates.
Disclaimer: I am long Biogen Idec. I have no plans to buy or sell in the next 3 days, but do sell stocks I feel have become overpriced.
See also http://www.biogenidec.com/
So, the eternal investor questions: did something change? Does the run up reflect value that was already there back in March? Could this be another momentum run unjustified by fundamentals? Could there be even more value in the stock?
We have had a number of recent data points to inform our views. BG-12, an oral agent for multiple sclerosis (MS), produced Phase III clinical results that should gain marketing approval from the FDA (of course, there is no guarantee of that). Biogen is generally held to sell the most effective MS drugs, but recently Gilenya by Novartis, became the first oral agent on the market.
In addition Daclizumab HYP showed good Phase 2b trial results. Dexpramipexole for Lou Gehrig's (ALS) disease Phase III trial became fully enrolled recently.
Third quarter (Q3) results released on October 28, along with the analyst conference call, demonstrated that current therapies are still ramping revenues. Biogen Idec's two multiple sclerosis (MS) blockbuster drugs are Avonex, with revenues in Q3 of $682 million, up 6% y/y, and Tysabri, with revenues of $277 million, up 26% y/y. Avonex has been around a long time and dominates the market, but its sales had flattened until the PEN was recently introduced, which makes administering it much easier. On June 22 Biogen had announced the EU approved including JCV status as a risk factor for Tysabri, which we presumed would happen in March. The risk of death or severe injury from PML, a result of JCV getting out of control when immune responses are suppressed (immune responses are the cause of MS), had been a big problem for Biogen. Now patients can test to find out if they are infected with JCV or not and with the help of their doctors make appropriate decisions about the risks versus the benefits of Tysabri.
Given all this good news and the big run up in 2011, are we at a just-right stock price? Of course next year's price will depend on how revenues and profits ramp (or don't) in 2012, and what the outlook looks like for 2013.
I will be surprised if Tysabri revenue growth does not accelerate in the second half of 2012 if BG-12 comes online. I am would not sell the stock in the current price band, and believe BIIB is currently a good bet for new money. However, in aside to the usual macroeconomic and stock market risks, all therapies run some risk from new adverse reactions being discovered and from current and future competing products.
At this point Biogen pays no dividend, but is certainly a profitable enough company that it could. It would also show management's confidence in the company's future. They spend a lot on R&D, over $300 million (GAAP) in Q3, and have a lot of cash, $2.9 billion, and a lot of non-GAAP net income, $395 million in Q3. They do use cash for stock buy backs and to acquire promissing pipeline candidates.
Disclaimer: I am long Biogen Idec. I have no plans to buy or sell in the next 3 days, but do sell stocks I feel have become overpriced.
See also http://www.biogenidec.com/
Wednesday, October 26, 2011
Biogen Idec, Onyx Pharmaceutical score big
Today two of my biotechnology stocks, Biogen Idec (BIIB) and Onyx Pharmaceuticals (ONXX), are climbing on good results from clinical trials. In Biogen's case results are for daclizumab for multiple sclerosis and for BG-12 for MS as well. Onyx's results are for regorafenib for metastatic colorectal cancer, which is being developed by Bayer, but for which Onyx gets royalties.
This made me think about my now ancient Choosing A Biotech Stock 3 part series. I wrote Part I, the Overview, on September 3, 2007. Was my advice, which I followed, any good?
My hopes were high. I said, "I think some biotechnology stocks are going to be worth a lot more money (better than market returns) in a few years than they are now, and may make me filthy rich if I live to see the long run. I could spread the risk out by buying a lot of different biotechs, or going to a fund. But, well, while I would recommend a fund to anyone too lazy to do their own research, the problem with spreading risk broadly is that you can't get any alpha (profits above typical market) that way."
I already owned Celgene, Dendreon, and Anesiva (which went bankrupt later). I mentioned Gilead Sciences (GILD) and Biogen Idec (BIIB) as being the kinds of companies that I would look at. In Part 2 I took a close look at Gilead. In Part 3 I took a close look at Biogen, but then said that despite their pipeline, "Wow, they have a very strong pipeline (See BIIB pipeline page)," I would buy Gilead first.
Of course after that purchase we had the recession, when most stocks were oversold. I ended up buying Biogen and Onyx as well, and added to each position. The result, so far, has been a mixed bag.
I already owned Celgene, which I first bought in June 2007 for $59.34. I bought more as low as $38.59 in May 2009. As I write it is selling for $66.09.
I first bought Gilead in October 2007 for $42.23. I bought more for $46.55 in February 0f 2010. As I write it is selling for $41.06.
I first bought Biogen in February 2008 for $61.57. I bought more at a low of $46.67 in September of 2008. As I write it is selling for $117.87. Clearly this turned out to be the best investment in the group, so far.
I first bought Onyx in May 2008 for $34.87. My best purchase was for $26.20 in May 2010. As I write it is selling for $39.59.
Clearly Gilead has been the dog of the group, but my selection criteria were pretty good overall. That reminds me, and should remind all of us who are seeking alpha, to keep diversified, even when we have found a sound strategy for investing.
It also reminds me of the importance of patience when doing long-term investing. When a biotechnology company has value in its therapy pipeline, it helps to think in terms of 5 to 10 years, not 5 to 10 days.
This made me think about my now ancient Choosing A Biotech Stock 3 part series. I wrote Part I, the Overview, on September 3, 2007. Was my advice, which I followed, any good?
My hopes were high. I said, "I think some biotechnology stocks are going to be worth a lot more money (better than market returns) in a few years than they are now, and may make me filthy rich if I live to see the long run. I could spread the risk out by buying a lot of different biotechs, or going to a fund. But, well, while I would recommend a fund to anyone too lazy to do their own research, the problem with spreading risk broadly is that you can't get any alpha (profits above typical market) that way."
I already owned Celgene, Dendreon, and Anesiva (which went bankrupt later). I mentioned Gilead Sciences (GILD) and Biogen Idec (BIIB) as being the kinds of companies that I would look at. In Part 2 I took a close look at Gilead. In Part 3 I took a close look at Biogen, but then said that despite their pipeline, "Wow, they have a very strong pipeline (See BIIB pipeline page)," I would buy Gilead first.
Of course after that purchase we had the recession, when most stocks were oversold. I ended up buying Biogen and Onyx as well, and added to each position. The result, so far, has been a mixed bag.
I already owned Celgene, which I first bought in June 2007 for $59.34. I bought more as low as $38.59 in May 2009. As I write it is selling for $66.09.
I first bought Gilead in October 2007 for $42.23. I bought more for $46.55 in February 0f 2010. As I write it is selling for $41.06.
I first bought Biogen in February 2008 for $61.57. I bought more at a low of $46.67 in September of 2008. As I write it is selling for $117.87. Clearly this turned out to be the best investment in the group, so far.
I first bought Onyx in May 2008 for $34.87. My best purchase was for $26.20 in May 2010. As I write it is selling for $39.59.
Clearly Gilead has been the dog of the group, but my selection criteria were pretty good overall. That reminds me, and should remind all of us who are seeking alpha, to keep diversified, even when we have found a sound strategy for investing.
It also reminds me of the importance of patience when doing long-term investing. When a biotechnology company has value in its therapy pipeline, it helps to think in terms of 5 to 10 years, not 5 to 10 days.
Sunday, October 9, 2011
Earnings Preview: AMD, AKAM, GILD, BIIB, CELG
Earnings season is upon us again. Of the stocks I watch most closely (in this case because I own some of each of them), Akamai (AKAM) has scheduled its analyst conference for October 26, and Advanced Micro Devices (AMD) is on October 27. Gilead Sciences (GILD), Celgene (CELG), and Biogen Idec (BIIB) should also report before month's end, but have not yet set dates.
While the information in analyst conferences comes from management, and so can be biased, it is still essential listening for serious investors. At the end sell-side analysts are allowed to ask questions (some micro-caps even let investors ask questions), and on occasion an answer to a question can give important insights into the company. I take notes while I listen and even post them on the web; listen to management for a couple of years and you may be able to tell a lot from the way they answer or evade questions. Going back a few years and checking on how management's predictions worked out can also be illuminating.
Akamai typically is a high P/E stock that has to justify that ratio by showing continuous growth. Many companies have tried to compete with Akamai at accelerated delivery of web content, yet over a decade later Akamai still has incredible market share and has branched out into adjacent businesses like cloud security. Pricing has been an issue lately. Look to see if Akamai's volume of business is growing fast enough to compensate for falling prices. Q3 is a slowish quarter for content delivery, with a big bump coming from e-commerce in Q4, so Q4 guidance is also a key indicator of the health of this business.
AMD already pre-announced, sending the stock price into free-fall. This was as I predicted in AMD at Earnings Crossroad, but worse. The good side of the news is demand for AMD's new server and APU chips is strong. What we want to know from management is how strong is the demand, and how quickly can they gear up chip production to meet the demand.
Biogen Idec (BIIB) guided to low to mid single digit revenue growth over 2011, which for Q3 would run to roughtly $1.2 billion. Tysabri sales over $280 million would be a positive indicator, but the key question is data or FDA approvals for late-pipeline drugs like BG-12 or Daclizumab for multiple sclerosis, which are likely to be announced on other occasions.
Gilead (GILD) is a cash cow that has a low P/E due to patents expiring on some of its anti-viral drugs over the next decade. If management would pay a dividend, the value of the franchise would be more obvious. They are doing a lot of research on new anti-viral compounds that could kick growth into high gear again if approved. Expect something over $2 billion in revenue, $940 million in cash flow from operations. The key issue would be timelines for Endurant and and the "Quad" regimen. Don't expect the stock to budge much in this market until they pay a dividend or announce positive Phase III data for a hepatitis C multi-drug therapy (they are only in Phase II, so it will be a while).
Celgene (CELG) is another cash cow, but with a rapid revenue and profit growth rate (and a higher P/E). Look for Revlimid revenues over $800 million, Vidaza over $165 million or Abraxane, their newest drug, revenues breaking though $100 million in the quarter. Celgene has a pipeline of potential drugs that is so extensive it would take several articles just to go over them. See Celgene drug pipeline for a list. Unless they mostly strike out, anyone who does not buy Celgene at today's price will wish they had in five years, but long-term investors are hard to find in this market.
Disclaimer: I am long in all of these stocks.
While the information in analyst conferences comes from management, and so can be biased, it is still essential listening for serious investors. At the end sell-side analysts are allowed to ask questions (some micro-caps even let investors ask questions), and on occasion an answer to a question can give important insights into the company. I take notes while I listen and even post them on the web; listen to management for a couple of years and you may be able to tell a lot from the way they answer or evade questions. Going back a few years and checking on how management's predictions worked out can also be illuminating.
Akamai typically is a high P/E stock that has to justify that ratio by showing continuous growth. Many companies have tried to compete with Akamai at accelerated delivery of web content, yet over a decade later Akamai still has incredible market share and has branched out into adjacent businesses like cloud security. Pricing has been an issue lately. Look to see if Akamai's volume of business is growing fast enough to compensate for falling prices. Q3 is a slowish quarter for content delivery, with a big bump coming from e-commerce in Q4, so Q4 guidance is also a key indicator of the health of this business.
AMD already pre-announced, sending the stock price into free-fall. This was as I predicted in AMD at Earnings Crossroad, but worse. The good side of the news is demand for AMD's new server and APU chips is strong. What we want to know from management is how strong is the demand, and how quickly can they gear up chip production to meet the demand.
Biogen Idec (BIIB) guided to low to mid single digit revenue growth over 2011, which for Q3 would run to roughtly $1.2 billion. Tysabri sales over $280 million would be a positive indicator, but the key question is data or FDA approvals for late-pipeline drugs like BG-12 or Daclizumab for multiple sclerosis, which are likely to be announced on other occasions.
Gilead (GILD) is a cash cow that has a low P/E due to patents expiring on some of its anti-viral drugs over the next decade. If management would pay a dividend, the value of the franchise would be more obvious. They are doing a lot of research on new anti-viral compounds that could kick growth into high gear again if approved. Expect something over $2 billion in revenue, $940 million in cash flow from operations. The key issue would be timelines for Endurant and and the "Quad" regimen. Don't expect the stock to budge much in this market until they pay a dividend or announce positive Phase III data for a hepatitis C multi-drug therapy (they are only in Phase II, so it will be a while).
Celgene (CELG) is another cash cow, but with a rapid revenue and profit growth rate (and a higher P/E). Look for Revlimid revenues over $800 million, Vidaza over $165 million or Abraxane, their newest drug, revenues breaking though $100 million in the quarter. Celgene has a pipeline of potential drugs that is so extensive it would take several articles just to go over them. See Celgene drug pipeline for a list. Unless they mostly strike out, anyone who does not buy Celgene at today's price will wish they had in five years, but long-term investors are hard to find in this market.
Disclaimer: I am long in all of these stocks.
Monday, July 11, 2011
Biogen Idec (BIIB) Valuation Thoughts
When I wrote "Biogen Idec PML Test Approved in Europe, Changing Tysabri Outlook" on March 15, 2011, the price per share of BIIB was $69.56. Today it closed at $105.53, having backed off its recent 52 week high of $109.63. Quite a run. So, the eternal investor questions: did something change? Does the run up reflect value that was already there back in March? Could this be another momentum run unjustified by fundamentals? Could there be even more value in the stock?
Biogen Idec's two multiple sclerosis (MS) blockbuster drugs are Avonex, with revenues in Q4 2010 of $654 million, and Tysabri, with revenues of $242 million. Also Rituxan generated $258 million. As I wrote earlier, most investors and analysts expect Tysabri revenues to rise now that patients can be pre-tested for JCV. Trailing earnings are $4.35 per share, so the current price/earnings (PE) ratio, while not real high, does anticipate solid earnings growth. This is despite competition from new MS therapies, notably Gilenya by Novartis, which is the first oral treatment for the disease, but which was not as effective as Tysabri in clinical trials.
I have always argued that there is undiscovered value in the earlier stages of the Biogen Idec pipeline, but that situation is little changed since March. With 8 indications in Phase III trials, chances are that several new therapies will be approved over the next couple of years. However, Biogen does plan to narrow the scope of its development program, eliminating oncology and cardiovascular candidates to focus on immunology. This should reduce costs in the short run.
On June 7 Biogen announced the EU had approved its Avonex PEN, which is a single-use injection device which will make taking the drug more convenient for MS patients. Nice, but not responsible for a $40 stock run-up.
On June 22 Biogen announced the EU approved including JCV status as a risk factor for Tysabri, which we presumed would happen in March.
On July 3, after the run-up, Biogen announced some nice science research on the role of death receptor-6 (DR6) in MS. Nice, but probably ten years away from adding to revenues, if it should work out.
It is fair to conclude that the price of BIIB had been low because of fears about Tysabri revenue being permanently stalled by the JCV complication. Those fears stopped being justified as we learned more about JCV and its detection. It is remarkable how a rising stock price can make fear evaporate.
So are we at a just-right stock price? Of course next year's price will depend on how revenues and profits ramp (or don't) in 2011, and what the outlook looks like for 2013.
During 2010, when Tysabri was still under suspicion, Biogen grew total revenues grew to $4.72 billion from $4.38 billion in 2009. That is just 7.7% annual growth. But earnings per share grew 17.6%. In the latest reported quarter, Q1, revenue grew 9% y/y.
I will be surprised if Tysabri revenue growth does not accelerate. I am fine holding the stock in the current price band, but I would want to see actual revenue and profit acceleration before feeling a higher band is a safe bet.
At this point Biogen pays no dividend, but is certainly a profitable enough company that it could. It would also show management's confidence in the company's future.
See also http://www.biogenidec.com/
Monday, April 18, 2011
Analyst Calls this week: Intuitive Surgical, Gilead, Biogen, AMD
Earnings season begins in earnest for me this week. As usual I will be listening to analyst conference calls. All serious investors should, but then again that is time consuming. I take notes and post them on the web for my own and others references. Here are this week's calls and links for my summaries. The pages are up, so you can click on the links, bookmark the pages, and come back when the summaries are ready, often a few minutes after the conference ends, but sometimes up to a day later due to my work load.
Intuitive Surgical (ISRG) analyst call, Tuesday, April 19, 2011 at 1:30 PM
Gilead Sciences (GILD) analyst call, Wednesday, April 20, 2011 at 2:30 PM
Biogen Idec (BIIB) analyst call, Thursday, April 21, 2011 at 1:30 PM
AMD (AMD) analyst call, Thursday, April 21, 2011 at 2:00 PM
I currently have positions in Gilead, Biogen and AMD, but not in Intuitive Surgical.
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