Bill Gunderson

About the Author Bill Gunderson

Bill Gunderson is the CEO and Chief Market Strategist of Gunderson Capital Managment in San Diego, CA. He is also a professional money manager, former research analyst, author of Best Stocks Now, and developer of the Best Stocks Now smartphone app. He offers four free weeks to his weekly Best Stocks Now to Seeking Alpha readers. http://www.pwstreet.com He also hosts a daily stock market radio show on AM1000 KCEO from 7am-8am. http://www.kceoradio.com Bill has appeared on the Fox Business Channel and on Bloomberg radio numerous times. He has been published in Barron's, Forbes, TheStreet.com and numerous other publications i.e. Los Angeles Business Journal, San Diego Union Tribune, Phoenix Business Journal, Salem News, Rochester Business Journal, and many others.

Biogen’s Alzheimer Surprise


I have written about Biogen (NASDAQ:BIIB) previously in numerous articles as it is one of my favorite biotech names. But the positive thesis on the stock was tied to its success with its Multiple Sclerosis drug franchise. It also recently had a drug approved for Hemophilia back in June, giving it yet another drug with blockbuster potential.

But an Alzheimer’s drug not really on anyone’s radar, a drug still in Phase 1 trials, just reported some very promising data at Deutsche Bank’s BIOFEST. The data was so promising in fact that the company will start performing Phase 3 trials, skipping over Phase 2 entirely.

Drug makers have been trying for years to develop an effective treatment for Alzheimer’s disease which affects 5 million people in the U.S and is the 6th leading cause of death. It is a tragic disease which takes a huge toll on patients and family members, but the disease also has a huge financial impact on us as a country as it is the most expensive condition in the nation. According to data compiled by the Alzheimer’s Association, the direct costs to American society of caring for those with Alzheimer’s is $214 billion, $150 billion of which is paid for by Medicare and Medicaid.

The company announced that results from a 194-patient Phase 1 trial for BIIB-037, which it is jointly developing with Japan’s Eisai, were positive enough to warrant a push straight to Phase 3. The result that has gotten everyone so excited is that the trial saw statistically significant improvement in cognitive ability after 54 weeks of treatment. But another groundbreaking aspect of the trial was it may confirm an aspect of the disease that was only suspected before and never proven.

Beta amyloid is a toxic form of protein that builds up on the brain of Alzheimer’s patients, forming visible plaque. Up until now, it was unsubstantiated that reducing the plaque would reduce symptoms. Other drugmakers had based drugs on that theory and failed miserably. Johnson & Johnson (NYSE:JNJ), Pfizer (NYSE:PFE) and Elan, and Eli Lilly (NYSE:LLY) all had promising Alzheimer’s drugs which did not succeed.

Other drugs were able to reduce plaque, but these results were the first to demonstrate an associated benefit in brain function. Obviously Biogen’s results are still very early-stage and there are still dosing and safety issues, but investors and analysts were still very excited with the data. As mentioned, these results were not really on anyone’s radar. The news lifted the stock out of the doldrums. Biogen shares traded up almost $21 per share or 7% on the news.

So based on this news, let’s take another look at Biogen stock. Biogen is a large cap stock with a market cap of $72.8 billion. While technically it is a biotech name, it has multiple drugs that have received FDA approval qualifying it as a drug stock with a Conservative risk profile. I am long Biogen stock in my Conservative Growth accounts.

Data from Best Stocks Now app

Data from Best Stocks Now app

Biogen’s receives a Value Grade of A. Its forward PE multiple is 19, which is in line with the overall market. But its growth rate is more than 21% giving it an attractive PEG ratio of less than 1.

Data from Best Stocks Now app

Biogen stock has been a stellar performer for many years on the growth prospects of its MS drug franchise. It has consistently delivered returns in excess of the market, although it trailed the S&P 500 YTD.

Data from Best Stocks Now app

Currently Biogen stock ranks #707 out of the 3900+ stocks in the Best Stocks Now universe. The stock receives a Stock Grade of B+ which qualifies as a weak buy signal. However, nobody had Biogen’s Alzheimer’s drug in its models. Should this drug continue to achieve positive results, this would be a game changer for the company. The pivotal data is not expected to come out until 2018-2019 which is pretty far out. But it may be worth hanging out to see if this surprise continues to be a good one.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, blogger Bill Gunderson has a total average return of 7.5% and a 64% success rate. Bill Gunderson is Ranked #532 out of 4036 Bloggers

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