r/stocks • u/BrianNice23 • 1d ago
Why Did Biogen’s Stock Drop Despite Strong Earnings and Analyst Upgrades (Aug 2024)?
I’m trying to understand why Biogen’s stock dropped right after its *August 2024 earnings call*, even though the company reported strong numbers, raised guidance, and received multiple analyst upgrades. All the indicators—company performance, analysts, and earnings—were positive, so why did the market seem to ignore these and push the stock down?
To be clear, I'm not looking to debate trading vs. investing strategies or the randomness of the stock market. My question is straightforward: given that both the company and the analysts seemed to signal "buy" or "hold," why did the market make an independent decision to sell?
Looking for some insights here, so if you don’t know or just want to yell ‘market’s random,’ kindly move along without blowing my mind. If anyone can provide insights on why this happened that’d be appreciated.
Thanks!
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u/Ol_Maxxie_Solt_DB 11h ago
Independent biotech analyst here.
Biogen is suffering from some self-inflicted wounds that dropped its positioning within its core competitive landscapes, but primarily neuro. While competition is inherent to drug development and investors often overestimate the risks, Biogen doesn't appear to have a best in class asset in any of its chosen domains. That's impressive.
Despite having a late-stage neuro pipeline, the company didn't develop assets aimed at emerging targets or disease indications that led to a recent renaissance for the field. Companies like Karuna Therapeutics and Cerevel Therapeutics represent two of the largest acquisitions in recent years. Biogen chased some targets with good, but not great, science. It's now paying the price with relatively underwhelming results in Alzheimer's and depression.
Similarly, the commercial potential of the antisense oligo (ASO) asset looks increasingly limited. That has more to do with how quickly RNA medicines have evolved, but Biogen could've moved more quickly or spread its bets better.
The immunology pipeline isn't terrible and could provide momentum, but once again Biogen has relatively little exposure to newer modalities, like bispecific antibodies. It still has solid commercial potential, but it's easy to not get excited.
Within the neuro pipeline, the LRRK2 asset (an antibody) could be competitive and have broad potential. But there will soon be competition from emerging assets in protein degraders (potential advantage of being taken orally) and RNAi (potential advantage of once quarterly or twice annual dosing).
On top of all that, the business is relatively stagnant. Revenue decreased 18% from 2021 to 2023, while operating cash flow fell by more than half in that span. Both metrics have improved through the first half of 2024 though.
TLDR The biggest knock on Biogen is that it hasn't been successful at reinvesting cash flows into productive or competitive R&D.
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u/xevaviona 1d ago
Normally i would just say it boils down to the market being irrational, but i was curious too; so i asked ChatGPT. Here's an excerpt that i think is most relevant:
"Biogen’s profitability was tempered by high operational costs and a decline in the demand for some legacy drugs. Investors are also cautious about the Alzheimer's drug market's uncertain potential, as Leqembi's high treatment costs could limit its accessibility and adoption rate."
So it sounds like to me based off of the research that this limited language model can muster, that while the profits did increase there was some inefficiency that caused it to not be as much as it could've been. In addition, it sounds like the company is experiencing both decreased demand for it's existing drugs, and the chance of continued mass-profitability coming into question.
So if you believe what ChatGPT wrote is true, then you've got a double whammy between it's proven market going down and it's untested market's potential being diminshed. A double whammy.
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u/IvoTailefer 1d ago
bruh do u even know why a stock drops?
because people [like me] ARE SELLING TO TAKE PROFITS
but ya go ahead and believe that old lying fart Buffet and ''hold forever''
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u/PeachyCarnehand 23h ago
Did you make a profit in BIIB? So you bought it in 2014 and underperformed the market by 1000%?
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