Biogen stock has mostly trended sideways this year, but that could soon change with $8 billion to $10 billion in acquisition-focused dry powder, an analyst said Tuesday.
Wedbush analyst Laura Chico notes Biogen wrapped two high-profile acquisitions last year, taking over Reta Pharmaceuticals and Hi-Bio. Reta developed Skyclarys, which treats a genetic condition called Friedreich's ataxia. Hi-Bio is working on treatments for immune-mediated diseases.
But Biogen has said it still has up to $10 billion to use in acquisitions over the next two years, Chico said in a report. She sees Pharvaris, Viridian Therapeutics and Edgewise Therapeutics as potentially powerful takeover candidates for Biogen.
On today's stock market, Biogen stock ticked up 1.6% to 225.02. Viridian shares shot 8.7% to close at 15.97, and Pharvaris stock jumped 3.8% to 18.53. Shares of Edgewise, on the other hand, fell 2.9% to 22.20.
Biogen Stock: 'Fit for Growth' Strategy Underway
To compile her list, Chico screened 455 biotech companies with drugs in Phase 2 testing and market caps of $500 million to $4 billion.
Chico said Biogen is working on its "Fit for Growth" strategy, which aims to generate around $1 billion in operating-expense savings by 2025.
"While Biogen continues to implement its 'Fit for Growth' initiative and valuation appears more attractive, we do think additional revenue-generating assets are necessary for the turnaround to complete," she said.
This year, Biogen stock analysts expect the company's sales to decline roughly 3% before coming in flat in 2025. Analysts call for a return to growth in 2026 as $9.91 billion in sales climb about 4%.
Immunology, Neuromuscular Conditions In Focus
Pharvaris is developing a treatment for a swelling disease called hereditary angioedema, or HAE. The drug is in final-phase testing after "solid" proof-of-concept test results. Pharvaris' drug, known as deucrictibant, is a pill that uses a unique mechanism. This helps differentiate it from the other approaches in the roughly $3 billion market.
"We see deucrictibant fitting into Biogen's specialized immunology franchise," Chico said.
Chico kept her neutral rating on Biogen stock.
Meanwhile, Viridian's thyroid eye disease treatment is in Phase 3 testing with results from two tests expected in September and late 2024. Viridian's drug would go up against Amgen's approved med Tepezza. This acquisition would fit into the specialized immunology division.
Lastly, Edgewise would be an unexpected fit, given the company is focused on cardiac diseases like obstructive hypertrophic cardiomyopathy, or HCM. The company is also working on treatments for neuromuscular diseases like Duchenne muscular dystrophy and Becker muscular dystrophy.
"However, we wonder if a spinout of the Edgewise neuromuscular assets makes sense for both Edgewise and Biogen," she said. "Spinning out Edgewise's assets could generate additional funds for Edgewise and permit greater focus on cardiometabolic efforts."
Biogen stock is narrowly below its 50-day line, MarketSurge shows.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
