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Biogen’s Hemophilia and Alzheimer’s Disease Portfolio

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Portfolio expansion

To reduce its excessive reliance on the multiple sclerosis segment, Biogen (BIIB) has been actively developing drugs for diseases with substantial unmet demand such as hemophilia and Alzheimer’s disease.

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Hemophilia products

The above graph shows the revenues earned by Biogen’s hemophilia drugs, Alprolix and Eloctate. According to the National Hemophilia Foundation, about 400,000 people in the world are afflicted by hemophilia. Hemophilia is a condition where blood does not clot properly, and it is due to the deficiency of active clotting factors in the body.

Hemophilia is categorized in two types: hemophilia A and hemophilia B. The former is due to the lack of clotting factor VIII, and the latter is due to the lack of factor IX. Hemophilia A afflicts one out of 5,000 male babies, and hemophilia B affects one out of 30,000 male babies. Morningstar projects that by 2016, the global hemophilia treatment market will be worth $16 billion.

In 2014, Biogen introduced two new drugs in the US: Alprolix for hemophilia B and Eloctate for hemophilia A. Both drugs are considered to be a substantial advancement over pre-existing hemophilia drugs such as Pfizer’s (PFE) Xyntha and Baxter’s (BAX) Advate. According to Deutsche Bank, by 2017, Biogen can earn up to $1.7 billion from its hemophilia products.

Alzheimer’s disease product

According to the Alzheimer’s Association, “Alzheimer’s disease is a progressive, degenerative disorder that attacks the brain’s nerve cells, or neurons, resulting in loss of memory, thinking and language skills, and behavioral changes.” The Alzheimer’s Association estimates that currently, 5.3 million people in the US have Alzheimer’s disease.

Biogen is one of the biotechnology companies targeting this market. In March 2015, Biogen announced that the preliminary tests on a small sample of people, for the company’s experimental Alzheimer’s drug BIIB037, or aducanumab, generated positive results. The drug’s late-phase clinical trials, however, can lead to failures such as those witnessed by Eli Lilly’s Alzheimer drug solanezumab and Pfizer and Johnson & Johnson’s (JNJ) bapineuzumab.

In the absence of significant competition, if Biogen’s drug is approved by the Food and Drug Administration (or FDA), it can lead to significant profits for the company.

Investors can get exposure to Biogen’s innovative product portfolio while minimizing company-specific risk by investing in the iShares NASDAQ Biotechnology ETF (IBB). IBB has 7.48% of its holdings in Biogen.

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