Seven months ago, Biogen was on top of the world. The company had just received approval from the Food and Drug Administration for Aduhelm, the first Alzheimer’s drug in nearly two decades, and the stock rose nearly 40% in a day.
Now, Biogen shares are off 15% over 12 months and one analyst is talking about stripping the company for parts. This past week, Wedbush analyst Laura Chico wrote that it’s “time for a change” at Biogen. She laid out three options: Buy something, get bought, or “sell it for parts.” Things are too far gone at Biogen for buying something to help, she said, and getting bought is unlikely. That leaves No. 3.
Her note came days after the Centers for Medicare and Medicaid Services published a draft proposal to limit Medicare coverage of Aduhelm to people in CMS-approved clinical studies. A final decision will be made in three months, but if there’s no change, Aduhelm could effectively be dead. Biogen’s CEO has already warned of “additional measures” beyond $500 million in already announced cost cuts.
What does selling Biogen for parts mean? Biogen could unload “legacy efforts” to focus on “innovative business,” said Chico, who rates the stock at Neutral, selling, say, its biosimilars unit, rights to royalty streams, and some manufacturing capacity. If Biogen “believes the pipeline holds value, refining the strategic focus may be a vehicle to shift away from controversy and find a fresh start,” she wrote.
Other analysts noted it’s unlikely the final decision will differ much from the draft. Raymond James analyst Danielle Brill gave a reprieve a one-in-three chance and then, she said, only if “the political leadership forced the career staff at CMS to make that change.”
Next Week
Monday 1/24
Brown & Brown, Halliburton , IBM , Philips, and Zions Bancorp report quarterly results.
IHS Markit reports its Manufacturing and Services Purchasing Managers’ indexes for January. Consensus estimate is for a 56 reading for the manufacturing PMI and a 54 for the Services PMI. Both figures are less than the December data. The PMIs are off their record peaks from the middle of last year but remain well above the expansionary level of 50.
Tuesday 1/25
The world’s two largest companies release results this week as investors look to tech earnings to reverse the Nasdaq’s 9.5% drop this year. Microsoft reports after the close, followed by Apple on Thursday.
3M , American Express , Archer-Daniels-Midland , Capital One Financial , General Electric , Invesco, Johnson & Johnson , Lockheed Martin , NextEra Energy , Raytheon Technologies , Texas Instruments , and Verizon Communications release earnings.
S&P CoreLogic releases its Case-Shiller National Home Price Index for November. Economists forecast a 18% year-over-year rise, marginally less than in October. If estimates prove correct, it would be the 12th consecutive month with double-digit gains for home prices.
Wednesday 1/26
Abbott Laboratories , Anthem, AT&T , Automatic Data Processing , Boeing , Edwards Lifesciences , Freeport-McMoRan , General Dynamics, Intel , Kimberly-Clark , Nasdaq, Norfolk Southern , Seagate Technology Holdings , ServiceNow , and Tesla report quarterly results.
The Federal Open Market Committee announces its monetary-policy decision. The central bank is expected to keep the federal-funds rate unchanged near zero. The Fed has become increasingly hawkish in the past three months, and Wall Street has priced in one quarter-point rate hike at the FOMC’s March meeting and a total of four quarter-point hikes for the year.
The Census Bureau reports new residential home sales data. Consensus estimate is for a seasonally adjusted annual rate of 762,500 new single-family homes sold in December, 2.5% more than in November.
Thursday 1/27
Altria Group , Comcast , Crown Castle International , Danaher, Dow, International Paper , Mastercard , McDonald’s , Mondelez International , MSCI, Northrop Grumman , Nucor , Southwest Airlines , and Visa hold conference calls to discuss earnings.
The Bureau of Economic Analysis releases its preliminary estimate for fourth-quarter 2021 gross domestic product. Economists forecast a 5.6% rate of growth, after a 2.3% increase in the third quarter.
Friday 1/28
Caterpillar , Charter Communications , Chevron , Colgate-Palmolive , Phillips 66 , V.F. Corp.
, and Weyerhaeuser report quarterly results.
Write to Josh Nathan-Kazis at [email protected]
