Biogen: Strong Prospects With A Low Valuation

Summary

• Biogen has a market capitalization of roughly $50 billion with strong prospects and a P/E ~12. The company is focused on Alzheimer's, stroke, ALS, and other drugs.
• There are a number of catalysts that I recommend investors pay attention to in 2020, including the potential for new drug approvals and declines from existing businesses.
• Given the number of catalysts, it's heavily undervalued at this time, and I recommend investing for the long run.
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Biogen (NASDAQ: NASDAQ:BIIB) is a large biotechnology company by most standards, with a market capitalization hovering around $50 billion. Its reputation comes from being a renowned company in the neuroscience space, and as we’ll see throughout this article, Biogen's low valuation and strong R&D pipeline make it a solid investment.

(Biogen - Investors)

Target Markets

Biogen’s significant market potential comes from the fact that it operates in a number of different enormous markets. It’s not often that a biotech company’s news on a drug trial can move the stock price by double digits for a $50 billion company.

(Biogen's Portfolio - Company Investor Presentation)

The brain is one of the least understood organs, and the effect on modern medicine is clear, with neurological-related health issues rapidly becoming a major problem. Biogen is at the forefront of efforts to solve this. The company's MS program has ~2.5 million patients (the incidence rate of this disease is ~1/400 people). Additionally, the company's SMA program is working to solve a massive issue, the "leading genetic cause of infant mortality", and it does face competition here, as we'll discuss later.

Apart from that, Biogen is the leading potential provider for an Alzheimer’s treatment, a drug that currently has no recommended treatment but affects millions in the United States alone. The company originally stated that it wasn’t worth pursuing the drug further as a result of the original data. However, it let the trial run for a few months longer, and it turns out it could actually work.

Of course, whether the drug pans out remains to be seen, however, Biogen is currently engaging with the FDA in the US, Europe, and Japan to investigate regulatory filings. As visible before, the company also has 3 other molecules in trials for Alzheimer's, although they're all in early stage. The market potential here is enormous for

Analyst’s Disclosure:I am/we are long BIIB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.