Goldman Sachs is upgrading Biogen-Idec (NASDAQ:BIIB) to Buy from Neutral and adding the stock to their Conviction Buy list with a $61 tgt (up from $57).
According to the firm this is based on potential upside revision to earnings and attractive valuation. They believe the threat of generics and competition should be manageable, leading to their 2009/2010 EPS (incl. ESO) of $4.14 & $4.55 vs. consensus of $3.97 and $4.23, resp. BIIB’s pipeline is underestimated and should gain visibility in 2009/2010. The product profile and manufacturing capacity might be attractive for potential pharma acquirers. The intrinsic value of $46 implies a pipeline value of $3 which the firm views as attractive.
Catalyst
1) Safety data from over 10,000 patients on Tysabri therapy by yearend.
2) In 2009, MLCO expects Phase 3 data on Rituxan in lupus nephritis (1Q, $1bn potential), Phase 2 data on CDP323 for multiple sclerosis (MS), BIIB14 for Parkinson’s disease, and HSP90 inhibitor for cancer, as well as Phase 1/2 results on long acting Avonex for MS and long acting Factor IX for hemophilia B. Combined potential of the Phase 1&2 programs exceeds $3 bn.
3) Detailed data on two competing agents in MS in 4/09.
Notablecalls: Could do 3-4% to the upside.
According to the firm this is based on potential upside revision to earnings and attractive valuation. They believe the threat of generics and competition should be manageable, leading to their 2009/2010 EPS (incl. ESO) of $4.14 & $4.55 vs. consensus of $3.97 and $4.23, resp. BIIB’s pipeline is underestimated and should gain visibility in 2009/2010. The product profile and manufacturing capacity might be attractive for potential pharma acquirers. The intrinsic value of $46 implies a pipeline value of $3 which the firm views as attractive.
Catalyst
1) Safety data from over 10,000 patients on Tysabri therapy by yearend.
2) In 2009, MLCO expects Phase 3 data on Rituxan in lupus nephritis (1Q, $1bn potential), Phase 2 data on CDP323 for multiple sclerosis (MS), BIIB14 for Parkinson’s disease, and HSP90 inhibitor for cancer, as well as Phase 1/2 results on long acting Avonex for MS and long acting Factor IX for hemophilia B. Combined potential of the Phase 1&2 programs exceeds $3 bn.
3) Detailed data on two competing agents in MS in 4/09.
Notablecalls: Could do 3-4% to the upside.
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