June 9, 2016
By Mark Terry, BioSpace.com Breaking News Staff
After yesterday’s stock drop by Cambridge, Massachusetts-based Biogen , Thermo Fisher Scientific is now the state’s largest public company in terms of market capitalization—for now.
Biogen announced that a Phase II clinical trial of opicinumab (anti-LINGO-1), which was developed to repair the nerve damage caused by multiple sclerosis, failed to meet its primary endpoint. It also failed to meet a secondary efficacy endpoint. As a result, Biogen dropped from $289.84 on Monday, June 6, to $252.58 on Tuesday, June 7. Shares are currently trading for $254.17.
Essentially Biogen went from having a market capitalization of just over $60 billion, the largest in the state of Massachusetts, to slightly less than $56 billion. Which makes it number two just after Thermo Fisher.
Boston Business Journal notes that Thermo Fisher’s stock price grew 18 percent in the last year. In 2015, it reported $17 billion in revenue with a net income of almost $2 billion. Worldwide the company employs 50,000 people.
Thermo Fisher’s was at a yearly low on Sept. 22, 2015, trading at $125.25, then rising to $143.03 on Dec. 29. It dropped to $121.94 on Feb. 8, 2016, but has been on a steady increase since to its current share price of $154.14.
On May 27, Thermo Fisher announced that it was acquiring Hillsboro, Oregon-based FEI Company , which is a leader in high-performance electron microscopy. The overall price of the deal is about $4.2 billion, or $107.50 per share. It’s a cash deal. And in March, Thermo Fisher completed its acquisition of Affymetrix for about $1.3 billion, or $14 per share, also a cash deal.
Those two deals also underscore a big difference between Biogen and Thermo Fisher. Biogen is primarily a biotech company that develops and markets drugs. Thermo Fisher is primarily a medical device company. A comparison of the two companies isn’t exactly apples to apples.
And Biogen, despite some market volatility, is a pretty stable company with a dominating market presence in the MS space with three blockbuster drugs, Avonex, Tysabri and Tecfidera, each of which brings in about $1 billion in revenue annually. However, those drugs appear to be slowing down, getting some competition from generics. And the company is expecting to announce results from a Phase III trial in the next few months for its Alzheimer’s drug, aducanumab. It’s another high-risk project, but if the drug should get approved, you can expect company stocks to skyrocket.
There has also been pressure on Biogen to invest in other companies or products to bolster its revenue growth. As Max Nisen, writing for Bloomberg says, “This ratchets up the pressure on the rest of Biogen’s pipeline—particularly its high-risk, high-reward treatments for Alzheimer’s—and on the company to pull the M&A trigger and prove it has ways to grow. It may be time to restock or retool the pipeline with an aim toward safety or diversification. And it might not hurt to focus on finding a drug that’s closer to market, with better odds of success.”
In terms of who will be the biggest life science company in Massachusetts, at least in terms of market cap, neither Biogen nor Thermo Fisher should get too complacent. GE is planning to move its headquarters from Connecticut to Boston, which is expected to become effective on Aug. 22. Currently GE has a market cap of $274 billion, which would make it number one by a very large margin.
