Is Biogen stock a buy or sell as ALS study falls short of primary endpoints?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 18, 2021
  • Biogen shares fell on Monday after the company announced crucial data for tofersen study.
  • The Phase 3 trial for tofersen in patients ALS did not meet primary endpoints with statistical significance.
  • The company will focus on broadening the access to experimental therapy on all eligible ALS patients.

On Monday, Biogen Inc. (NASDAQ:BIIB) shares edged lower after announcing crucial data from the Phase 3 study for tofersen in patients with amyotrophic lateral sclerosis (ALS). 

According to the data, the double-blind, placebo-controlled VALOR study, involving 108 ALS patients with superoxide dismutase 1 (SOD1) genetic mutation failed to meet primary endpoints with statistical significance. 

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Biogen will now focus on broadening the study for access to experimental therapy on all eligible SOD1-ALS patients. 

Although the study did not return significant change in Revised Amyotrophic Lateral Sclerosis Functional Rating Scale (ALSFRS-R) from baseline to week 28, the company said:

[It achieved] favourable trends for tofersen across multiple secondary and exploratory measures of biologic activity and clinical function.

Is BIIB undervalued?

From an investment perspective, Biogen shares trade at an attractive forward price-earnings ratio of 13.78, making the stock a compelling option for value investors.

However, BIIB’s growth prospects are underwhelming, with analysts expecting its earnings per share to plummet by more than 21% this year, before falling at an average annual rate of 7.07% over the next five years.

Therefore, with Biogen shares down more than 32% since the 10th of June, the stock looks like a good short-term buy, but certainly not for the long term unless the outlook changes.

Source – TradingView

Technically, Biogen shares appear to be trading within a descending channel formation in the intraday chart. As a result, the stock has plunged closer to the oversold conditions of the 14-day RSI, creating a perfect opportunity for a rebound.

Therefore, investors could target potential rebound profits at about $315.81, or higher at $349.44, while $260.60 and $240.46 are the support levels.

It could be time to buy BIIB

In summary, although Biogen shares fell after Monday’s tofersen announcement, the company also said it gathered promising secondary data whilst switching strategy to broadening the study.

Therefore, given the stock’s compelling valuation multiples, the pullback could be an opportunity to buy.

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