Why Celgene Should Consider Buying Rival Biogen

January 24, 2017
By Mark Terry, BioSpace.com Breaking News Staff

Investors want Biogen to buy someone. Or they want Biogen to be bought. The same applies to Celgene .

Adam Feuerstein, writing for TheStreet’s Real Money, outlines five reasons why Celgene should buy Biogen.

1. Multiple sclerosis (MS)

MS is Biogen’s powerhouse franchise, bringing in more than $8 billion annually. One of the reasons investors push Biogen to acquire a company is because its MS franchise is getting stale, although $8 billion of “stale” is something most companies wouldn’t mind.

Celgene picked up its own MS drug, ozanimod, when it acquired Receptos in 2015 for $7.2 billion. Feuerstein argues that Celgene could use Biogen’s MS franchise to launch ozanimod, which he claims is going to be a blockbuster. “Ozanimod’s top-line Phase III results are coming soon,” he writes. “Instead of tiptoeing into the MS market in 2018, Celgene could essentially dominate the field with four approved drugs, each with a different mechanism of action.”

2. Neurobiology

Biogen has a lot riding on its Alzheimer’s drug, aducanumab. At least, investors seem to think the entire company’s future rests on that drug, despite its still strong MS franchise and the recent launch of Spinraza for spinal muscular atrophy that is projected to hit $1 to $2 billion in peak annual sales.

Feuerstein notes that Celgene’s chief executive officers, both Bob Hugin in 2016 and Mark Alles in 2017, spent a lot of time talking about Celgene’s plans to invest deeply in neuroscience, especially for neurodegenerative diseases. If Celgene acquired Biogen, aducanumab becomes much less of a pivot-point for the company’s success. “If the drug works,” Feuerstein writes, “then Celgene would have a new super-blockbuster drug to anchor its neuroscience push. But if aducanumab fails, investors wouldn’t care much because Celgene’s future doesn’t depend on it.”

3. Spinraza

Celgene doesn’t spend much time, energy or money on the orphan drug market, and maybe has no interest now. But it would pick up Spinraza in a Biogen acquisition, which would be both entrée to the market and a potentially $1 to $2 billion in annual revenue.

4. Biologics

Celgene primarily focuses on small-molecule drugs. Biogen is more focused on biologics. The diversification would have long-term benefits for Celgene.

5. Why not?

Feuerstein actually labels his fifth point as “Opportunity,” although the reasoning appears to be, Now’s as good a time as any and likely better than others. “The company’s internal and external (partnered) R&D pipeline is deeper than that of any other large-cap biotech. So, why buy Biogen now? Because the combination would be truly transformative.”

It’s worth pointing out that other analysts, including George Budwell, writing for The Motley Fool, think that Biogen’s central nervous system (CNS) pipeline is high risk. But that said, he also thought it was possible Allergan or Merck might consider buying Biogen.

And The Motley Fool’s Keith Speights noted that with Biogen’s hemophilia unit being spun off into Bioverativ, it not only increased value for shareholders, but made Biogen an easier, less expensive acquisition target.