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BIIB

Biogen

$296.08

-20.91 (-6.60%)

, MRK

Merck

$54.98

0.08 (0.15%)

11:13
02/15/18
02/15
11:13
02/15/18
11:13

Analysts caution against overreacting to Biogen's Alzheimer's trial change

At an industry conference yesterday, Biogen (BIIB) said the company has decided to add 510 patients to the Phase 3 aducanumab trials after seeing more "variability" than expected in a sample size re-estimation, sending its shares into negative territory. William Blair analyst Matt Phipps, however, argued that an enrollment increase is not unusual, with his peer at Piper Jaffray recommending investors buy Biogen shares amid the weakness. INCREASE 'PRUDENT, NOT UNUSUAL': Commenting on Biogen's announcement, William Blair's Phipps told investors that the increase in variability in and of itself does not preclude trial success. Further, the analyst said he believes increasing enrollment to ensure appropriate powering and confidence interval error margin is "prudent and not unusual." The trial is sufficiently powered to detect a benefit significantly below what was observed in the Phase Ib trial, he contended. Phipps also pointed out that he sees "very limited" downside at current price levels if aducanumab were to fail, and added that success of Biogen's growing earlier stage pipeline has the potential to provide additional upside. The analyst reiterated an Outperform rating on the stock. Also keeping an Overweight rating on Biogen's shares, Piper Jaffray analyst Christopher Raymond recommended using the selloff in the stock as a buying opportunity. While it is "a bit unnerving," particularly on the heels of another Phase 3 Alzheimer's failure for Merck's (MRK) verubecestat, the study remains blinded and variability on the primary endpoint can stem from a host of reasons, not all of them bad, Raymond told investors in a research note of his own. The analyst pointed out that variability in CDR-SB could be caused by a number of factors, such as a heterogeneous patient population, which would not necessarily doom it to failure either, or potentially a larger effect size, among other possibilities. Overall, Raymond does not think the news says much about the chances for an interim analysis or about aducanumab's efficacy profile. ALZHEIMER'S UNCERTAINTY RETURNS: Not as bullish after Biogen provided some updates to its Phase 3 Alzheimer's study, Jefferies analyst Michael Yee told investors that the changes do not necessarily dramatically change the probability of success, but do change Wall Street's "sense of confidence." The analyst said he believes the market will "swing back to uncertainty" on the Alzheimer's pendulum, and thinks Biogen needs to acquire de-risked "neuro/orphan companies" to "change the narrative" from being a binary Alzheimer's company. He reiterated a Hold rating and $375 price target on the shares. PRICE ACTION: In morning trading, shares of Biogen were fractionally down to $295.20 after dropping over 5% yesterday.

BIIB

Biogen

$296.08

-20.91 (-6.60%)

MRK

Merck

$54.98

0.08 (0.15%)

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BIIB Biogen
$296.08

-20.91 (-6.60%)

02/15/18
PIPR
02/15/18
NO CHANGE
Target $407
PIPR
Overweight
Biogen selloff yesterday a buying opportunity, says Piper Jaffray
Piper Jaffray analyst Christopher Raymond recommends using the selloff yesterday in shares of Biogen (BIIB) as a buying opportunity. The stock pulled back after management disclosed at a conference plans to up-size the Phase 3 aducanumab program by 510 patients total. While "this is a bit unnerving," particularly on the heels of another Phase 3 Alzheimer's failure for Merck's (MRK) verubecestat, the study remains blinded and variability on the primary endpoint can stem from a host of reasons, not all of them bad, Raymond tells investors in a research note titled "Aducanumab P3 Upsizing Doesn't Tell Us Much." The analyst does not think yesterday's news says much about the chances for an interim analysis or about aducanumab's efficacy profile. He keeps an Overweight rating on Biogen with a $407 price target.
02/15/18
ADAM
02/15/18
NO CHANGE
Target $350
ADAM
Hold
Biogen trial change does not alter efficacy assumptions, says Canaccord
Canaccord analyst Sumant Kulkarni noted Biogen announced an upsizing to its Alzheimer drug trial due to greater variability on the primary endpoint. The analyst said this was based on a pre-specified plan and does not change the efficacy assumptions of the drug. As a result he expects the shares to recover some of their losses. Kulkarni maintained his Hold rating and $350 price target on Biogen shares.
02/15/18
WBLR
02/15/18
NO CHANGE
WBLR
Outperform
Biogen enrollment increase is not unusual, says William Blair
William Blair analyst Matt Phipps believes increasing enrollment of Biogen's Phase III trials of aducanumab in prodromal Alzheimer's disease to ensure appropriate powering and confidence interval error margin, which caused yesterday's share selloff, is "prudent and not unusual." Based on his analysis, the trial is sufficiently powered to detect a benefit significantly below what was observed in the Phase Ib trial. The increase in variability in and of itself does not preclude trial success, Phipps tells investors in a research note. He sees "very limited" downside at current price levels if aducanumab were to fail, and adds that success of Biogen's growing earlier stage pipeline has the potential to provide additional upside. The analyst sees upside potential of over 50%, to $500 per share, if Phase III trials of aducanumab are successful, and a base support level slightly below $300 per share if the trials fail. Phipps keeps an Outperform rating on Biogen.
02/15/18
MSCO
02/15/18
NO CHANGE
Target $385
MSCO
Overweight
Morgan Stanley says Biogen Alzheimer trial change could be positive or negative
Morgan Stanley analyst Matthew Harrison noted that Biogen management indicated during an industry conference presentation that the enrollment for the Phase 3 aducanumab trials in Alzheimer's was being increased by 510 patients. Investors clearly took this as bad news, but "we just don't have enough information to know if the reason driving the change is bad or good," Harrison tells investors. The higher variability could be driven by a larger than expected treatment effect and "it is completely possible...aducanumab is actually doing better than expected," he added. Stating that the news doesn't fundamentally change his positive view on Biogen, Harrison maintains an Overweight rating on the shares.
MRK Merck
$54.98

0.08 (0.15%)

01/17/18
BMOC
01/17/18
NO CHANGE
Target $72
BMOC
Outperform
Merck price target raised to $72 from $68 at BMO Capital
BMO Capital analyst Alex Arfaei raised his price target on Merck to $72 from $68, keeping his Outperform rating following a 6% move higher in the stock price yesterday. The analyst says he remains bullish based on a "meaningful upside for Keytruda" and better performance from supporting drug franchises such as Gardasil. Arfaei warns however that while Keytruda has solidified its lead in non-small cell lung cancer market, it remains the company's only major growth driver while immuno oncology becomes increasingly more competitive.
02/14/18
BMOC
02/14/18
NO CHANGE
Target $65
BMOC
Outperform
Merck price target lowered to $65 from $70 at BMO Capital
BMO Capital analyst Alex Arfaei lowered his price target on Merck to $65 after the company discontinued its APECS study. The analyst sees this as "another setback that increases Merck's dependence on Keytruda" and contends that the company needs other meaningful drivers. Arfaei keeps his Outperform rating based on his confidence in Keytruda growth and Merck's Immuno-oncology execution.
02/15/18
02/15/18
UPGRADE
Target $78

Overweight
Bristol-Myers upgraded on immuno-oncology growth prospects at Morgan Stanley
As previously reported, Morgan Stanley analyst David Risinger upgraded Bristol-Myers (BMY) to Overweight from Equal Weight as he has become more optimistic on the immuno-oncology Opdivo + Yervoy combo in first-line lung cancer, which he notes is the largest cancer market. After the analyst reviewed combo toxicity in select combo studies with similar dosing as Bristol's CM-227 and compared cross trial against Merck's (MRK) Keynote-021G trial that tested Keytruda + chemo, he concluded that discontinuation rates due to side effects appear roughly comparable and now thinks Opdivo + Yervoy toxicity in lung cancer is likely to be acceptable. Risinger raised his price target on Bristol-Myers shares to $78 from $63.

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