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The Company creates new standards of care in oncology, neurology, immunology and other specialty areas of unmet medical need and engaged in the development, manufacturing, and commercialization of novel therapies.
Biogen Idec Inc, born in 2003 post the merger of Biogen and Idec Pharmaceuticals, develops, manufactures and commercializes novel therapies. With five approved products viz. Avonex, Rituxan, Tysabr, Amevive, Zevalin and several other products in various stages of clinical trials, it caters to oncology, neurology, dermatology and rheumatology segment.This Massachusetts based company recorded solid financial performance in fiscal 2006 with revenues of $2.68 billion an 11% growth and 34% increase in its bottom-line on back of its block-buster drugs Avonex and Rituxan which together contributed about 95% to the top-line.The main driver for the company going forward would be continued strong sales of its blockbuster portfolio besides growing opportunities in oncology segment which the company seems to be well placed to capitalize. The oncology market is the third largest pharmaceutical market, behind the cardiovascular and CNS therapy areas. It is growing 10% annually and slated to be $53 billion market by 2008. This augurs well for biogen as it is a global leader in development of antibody-based oncology therapeutics. The FDA has also granted priority review status to Biogen Idec/Elan’s multiple sclerosis (MS) drug Antegren which is great news for the company as it highlights the block-buster potential in MS space. However, there are certain issues that should be of some concern. Chief among them would be lack of late stage pipeline in CNS space and pending lawsuit against the company alleging illegal discounts to boost sales.The company is profitable, generating positive free cash flows, having block buster drugs and promising pipeline. Nonetheless, with a very high price to earning multiple, it is trading at significant premium to its peers. The growth envisaged by the management seems to be already in the price. Its peer group also seems to be attractively priced. Hence, despite the favorable fundamental outlook the stock may still under perform the market.
Do not be fooled by the triple digit P/E listed on financial websites because if you look closely, the bottom-line is hurt by write-offs of intangibles (which is great since BIIB doesn't have to pay taxes on them) and one-time events (acquisitions). Non-GAAP EPS is expected to be in the $2.5-$2.65/share range in 2007 which means the P/E will be in the high teens if the stock price remains the same. So, with that in mind, the stock actually trades at a discount to the biotech sector (when comparing apples to apples). A company with that much potential trading at the S&P 500 P/E is, in my eyes, unreasonably cheap. This is likely a make or break year for the stock (the company is as solid as always) but the odds seem very favorable given the results from the recent clinical trials.
The Netscribe post misspells Tysabri, and then does not explain that Antgren is the previous name for Tysabri, which is now approved. See my ELN reply to Netscribe for details, but I believe Tysabri is heavily undervalued because of an overhyped scare. As Tysabri ramps up the earnings impact (BIIB gets 50%) is likely to be significant -- but not as good as for ELN which has less revenue outside Tysabri now.-Keith
Biogen Idec Inc is one of the leaders in bio-tech sphere. It has a relatively well diversified portfolio catering to oncology, neurology and immunology. Is product pipeline is also deep with around 20 product candidates in various stages of development. The company derives more than 60 percent of its total revenues from its block buster drug Avonex which addresses multiple sclerosis (MS). It’s estimated that the total annual economic burden of MS in the United States exceeds $6.8 billion with a lifetime cost of $2.2 million per patient. A recent study conducted by the company concluded that the total one-year cost of Avonex is lowest vis--vis other interferon beta treatments. This augurs well for the company. Tysabri, which was re-introduced last year is also expected to ramp up sales in fiscal 2007.The company’s efforts to restructure its operations by taking off non strategic assets and cutting staff strength would bear fruit is the long run. All in all the company seems to be a fundamentally sound company. However it seems that company’s stock price has captured all the fundamental positives in the stock. It seems expensive not only on stand alone basis but also when compared to its peer group. The company’s balance-sheet, income statement and cash flow display a strong and stable picture. Going forward it is also likely to gain traction in the traction lucrative oncology segment. However it’s commanding extremely rich valuations especially given its growth profile, which is expected to be stable but not spectacular.
Very good pitch, I agree it is over priced
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