Biogen (BIIB) Stock Tumbles In Sympathy To LLY, C’mon Man!

Biogen Inc (NASDAQ: BIIB)

Biogen stock is getting whacked in sympathy to Eli Lilly’s announcement that it has once again failed in its quest to prove solanezumab to be a viable treatment for Alzheimer’s patients.

Is The Hatchet Job On BIIB Warranted?

While trading in sympathy is common on Wall Street, it exemplifies the fact that the market trades in a herd mentality rather than focusing on individual stocks within a sector. In doing so, investors fail to identify and isolate promising candidates from those that have just experienced failure. However, the “shoot first and ask questions later” sellers provide patient investors with significant and discounted buying opportunities.

BIIB, for instance, is clearly on a more defined and promising track than LLY ever dreamed of being. In September of 2016, BIIB was granted fast-track designation for its Alzheimer’s treatment, aducanumab. The stock advanced on the announcement with good reason, and the unwarranted plunge this morning may have over thought the LLY relationship.

The fast-track designation offers an expedited pathway to bring new treatments and therapies to market to treat serious and unmet medical conditions.

Data from previous aducanumab trials indicate that the drug is showing promising results and efficacy in patients with the disease. BIIB’s¬†aducanumab targets beta amyloid plaques that scientists believe to be a leading cause of the disease.

BIIB Phase III Trials, Billions In Potential

BIIB is conducting two phase III trials to asses safety and effectiveness in slowing the decline in cognitive ability in patients with early stage Alzheimer’s. In its prior trials, aducanumab demonstrated statistically significant improvement in slowing the decline in cognitive ability in patients when compared to a placebo group. The results are promising, however, as stated, BIIB still needs to evaluate safety, since several patients had adverse effects during the trial;¬†BIIB needs to eliminate aducanumab as the primary contributor of those reactions.

Nevertheless, investors have embraced the aducanumab results and are looking past the potential adverse effects for the time being. It demonstrates just how eager investors are to urge a treatment forward that may finally substantiate years of clinical research and hundreds of millions of dollars in capital.

If BIIB can prove aducanumab to be an effective treatment for Alzheimer’s, the market can be worth billions.

Disclosure: I have no position in any stock mentioned and no plans to initiate any positions within the next 72 hours.

I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.

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