The Motley Fool

What’s happening to the Biogen share price?

Image source: Getty Images

Following the approval of its latest drug, the share price of Biogen (NASDAQ:BIIB) has exploded this month. Seeing the stock of a biotech company surge after receiving the green light from regulators is quite common. But in the case of Biogen, the US pharmaceutical group has achieved a milestone that many of its peers have failed, despite investing billions of dollars. Let’s take a closer look at what just happened and whether this is a business that belongs in my portfolio.

The surging Biogen share price

Earlier this month, the FDA approved Biogen’s new Alzheimer’s drug called Aducanumab. This is actually the first medicine that targets the neurodegenerative disease to receive approval in nearly 20 years.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

There are already several products on the market that help reduce the symptoms of the disease. However, trial data from Aducanumab showed that it successfully breaks down clumps of amyloid plaques in the brain. These are what scientists believe cause the illness. In other words, it appears to be able to substantially slow down the progress of the disease — the first drug ever to do so.

Given that an estimated 5.5 million people in the US suffer from Alzheimer’s, this represents an enormous potential market for Biogen with little competition to fend off. The treatment is expected to cost $56,000 per year. So it opens up a possible $300bn annual opportunity for the firm in the US alone. Therefore, I’m not surprised to see the Biogen share price rise by double-digits on the news.

Taking a closer look at the fine print

As promising as this progress is, there remains a long road ahead for this business. It is worth being aware that the FDA approval was provided as part of the accelerated pathway. This pathway is reserved for rare cases where there are very few alternative treatments available. It enables companies like Biogen to get their unique treatments on the market faster while trials are still ongoing.

Moving forward, Biogen will need to begin new monitored confirmatory trials to conclusively determine whether Aducanumab works as well as believed. While the company can market and sell the drug in the meantime, this trial process will be long and expensive. What’s more, should it fail to achieve the desired results, Aducanumab may promptly have its approval status revoked.

The Biogen share price has been significantly elevated due to investor expectations of income from this new treatment. Therefore, should any signs of trouble start to emerge, I think it’s likely to mean a significant level of volatility in the stock.

Time to buy?

Several city analysts have labelled this latest achievement by Biogen as “game-changing”. And I’d have to agree. There remains a long road ahead to receiving full approval. But the company seems to have all the resources it needs to see the next set of trials to the end. And so, while the risks are high, I would consider adding Biogen to my portfolio even after the recent jump in its share price.

But its not the only growth stock I've got my eye on. Did you know:

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Zaven Boyrazian does not own shares in Biogen. The Motley Fool UK has recommended Biogen. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.