Shares of Biogen (BIIB) are on the rise after the company and partner Ionis Pharmaceuticals (IONS) said a Phase 3 study of their muscular disorder treatment, SPINRAZA, met its primary endpoint. Commenting on the results, Piper Jaffray analyst Joshua Schimmer argued that this gives both companies a jump start on rival gene therapy player AveXis (AVXS) for the Type II/III setting. The analyst had upgraded Biogen to Overweight this morning, before the data was announced.
CLINICAL TRIAL DATA: Biogen and Ionis Pharmaceuticals announced that SPINRAZA, an investigational treatment for spinal muscular atrophy, met the primary endpoint at the interim analysis of CHERISH, the Phase 3 study evaluating SPINRAZA - formerly nusinersen - in later-onset Spinal Muscular Atrophy, or SMA. The analysis found that children receiving SPINRAZA experienced a highly statistically significant improvement in motor function compared to those who did not receive treatment. SPINRAZA demonstrated a favorable safety profile in the study. Biogen is preparing for the potential launch of SPINRAZA in the U.S. possibly as early as the end of 2016 or the first quarter of 2017.
JUMP START ON COMPETITION: Following this morning's data release, Piper Jaffray's Schimmer noted that the results look "very good" and should lead to a full approval for SPINRAZA for at least Type I and Type II patients, and likely Type III patients too. This gives Biogen and Ionis a jump start on rival gene therapy player AveXis for the Type II/III setting, the analyst told investors. Schimmer argued that if it weren't for AveXis's gene therapy emerging as a rival, SPINRAZA would become a $5B-plus mega-blockbuster by addressing one of the highest unmet needs in pediatric diseases that exists today. However, he pointed out that AveXis is moving quickly to compete in the market. While he stills hope Biogen "will find a way to partner" with AveXis, the analyst added that SPINRAZA can achieve $1B-$2B-plus in peak annual revenue even with gene therapy competition.
VALUE-CREATION DRIVERS AHEAD: Earlier today, Schimmer had upgraded Biogen to Overweight from Neutral, with a $335 price target, saying the company still has time to "get its act together" to maximize the value of its SMA franchise, and stop being "disciplined" in terms of M&A while being "undisciplined" with regards to its drug pipeline. In a research note to investors, the analyst pointed out that while there may be "trouble ahead," Biogen's current valuation seems like a "reasonable entry" point for the Alzheimer's and SMA franchises as well as some "interesting" pipeline opportunities.
PRICE ACTION: In morning trading, shares of Biogen have gained almost 6% to $292.94 and Ionis Pharmaceuticals' stock has jumped nearly 20% to $32.05. Meanwhile, shares of AveXis have slipped 1% to $63.45.
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