Why Has Biogen (BIIB) Stock Been Trading Down? – Bidness Etc

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Why Has Biogen (BIIB) Stock Been Trading Down?

Biogen stock has been falling due to patent issues and negative sentiments regarding the death of a patient who had been using Tecfidera. However, the company’s pipeline drugs show potential

Published: November 21, 2014 at 2:19 pm EST

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Hannah IshmaelPage 1 of 2

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Biogen Idec Inc (NASDAQ:BIIB) stock has been on a downslide due to patent battles with Forward Pharma A/S (NASDAQ:FWP) and news of a patient’s death. The patient had been using the company’s recently launched drug Tecfidera. The stock has shed 12.7% over the last three months.

Biogen stock was previously ahead of peers, but its recent decline is now bringing the sector down. It outperformed the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) by a margin of 5% in late August. The IBB ETF has rallied nearly 25% year-to-date (YTD), while Biogen’s gains stand at 7%.

Competition From Novartis’ Gilenya

On September 12, Novartis AG (ADR) (NYSE:NVS) released positive data reinforcing the efficacy of its multiple sclerosis (MS) drug Gilenya. MS is an autoimmune disease that deteriorates the patient’s nervous system and can cause death.

Biogen’s portfolio has a significant focus on MS drugs. The company generates 81% of its revenues through its MS portfolio. The leading drugs in the portfolio have been Avonex and Tysabri. Another drug, Tecfidera, was launched in March 2013 in the US, and was approved in Europe in January this year. High expectations have been associated with Tecfidera, an oral pill that has proven to be highly effective in treating relapsing-remitting MS (RRMS), the most common form of the disease. The drug is set to play a crucial role in Biogen’s future MS growth.

Gilenya and Tecfidera are both oral drugs, unlike others that are administered intravenously. This makes them easier to use. Moreover, Gilenya is also being evaluated for the primary-progressive form of the disorder (PPMS), and results from the INFORM trial are due imminently. While available drugs cater to RRMS patients, they are not equally effective for PPMS patients, who do not have many treatment options. Hence, Gilenya can win the market if it is found to be effective against PPMS, and will become a threat to Biogen and other MS drug makers, such as Sanofi’s SA (ADR) (NYSE:SNY) Genzyme unit

Forward Pharma Patent War

Forward Pharma previously claimed that the use of an active ingredient, called dimethyl fumarate (DMF), in Tecfidera infringed on its patent rights. DMF is known to be highly effective against the disorder, and is a crucial component of Tecfidera.

Forward Pharma is also working on its own RRMS drug called FP187, and plans to start Phase-III trials soon. It has said that it has the exclusive rights to DMF, and that Biogen is guilty of violating these patent rights.

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Hannah Ishmael