BIIB: Biogen, low risk long term buyReward to risk long term in $BIIB is very attractive here. I've gone long via a calendar spread before the latest FDA approval news, which turned out like a good long position when Biogen's Alzheimer's drug Aduhelm received accelerated approval. Following this, related companies which also have Alzheimer's drugs pending approval (like $LLY) received a dramatic boost. In the case of $LLY, their drug was approved as well a few days later. Both charts are very strong in the long term, showing signs of yearly uptrends present, indicating a multi year rally in these stocks is possible.
Accelerated approval means that the FDA approves the drug due to the possibility that it may provide therapeutic benefit to patients even though there is some uncertainty about the drug’s clinical benefit.
Aduhelm is the first therapy approved for Alzheimer’s disease that is directed at the underlying pathology itself (the presence of amyloid beta plaques in the brain). The clinical trials were the first to show that a reduction in these plaques is expected to lead to a reduction in the clinical decline of this form of dementia.
There is a lot of debate regarding the drug's price tag, as well as the clinical benefit it may or not provide, but I think it's a reasonable bet to make here, from a technical and fundamental standpoint. Valuation wise, the company has very low long term debt to equity, high free cash flow yield and a high earnings yield (trailing twelve months), earnings growth has been negative in the last year, but positive in the previous five years. There is a lot at stake with Aduhelm's potential success, so, don't risk more than you can afford to lose, consider that the yearly uptrend is invalid if price moves below 243.58 to define your position sizing based on your risk appetite.
Cheers,
Ivan Labrie.
