Biogen stock has been halted because of an announcement on October 30 that the company will not be accelerating the commercialization of its biosimilar eculizumab (marketed as space) in Europe and certain other markets. Instead, Biogen will wait until all European Union member states have implemented new rules, which are only expected to occur by March 2020. The company announced that it was evaluating the impact of the change in timing on its financial results in conjunction with a third-party marketing group. Read on to learn more about why Biogen stock is halted and what this means for investors.
Why Is Biogen Stock Halted?
Biogen’s stock is halted because its price plummeted, and it needs to halt trading for a short period of time. The company is working to obtain an extension, which will allow it to recover the lost value. If the company cannot obtain an extension, then it will be forced to sell its assets at a low price.
What Is Biogen?
Biogen is a biopharmaceutical company focused on the discovery, development, and commercialization of therapies for people with either rare or neurologically-impairing diseases. The company’s key products include Spinraza, a treatment for spinal muscular atrophy; Tecfidera, a first-line oral therapy for people living with multiple sclerosis; and Avonex and Plegridy, which are used for the treatment of relapsing forms of multiple sclerosis. Biogen’s products are sold globally, and the company has a market cap of $91 billion. Biogen has been a leading player in the biotech sector for over 30 years. Founded in 1981 by George Scangos, Biogen has a track record of success in the discovery and development of new drugs to treat a wide range of diseases. Biogen is headquartered in Massachusetts, with R&D and manufacturing facilities in the U.S., Canada, Switzerland, and Japan.
Halting Biogen Stock
- Biogen is a biopharmaceutical company focused on the discovery, development, and commercialization of therapies for people with either rare or neurologically-impairing diseases.
- The company’s key products include Spinraza, a treatment for spinal muscular atrophy; Tecfidera, a first-line oral therapy for people living with multiple sclerosis; and Avonex and Plegridy, which are used for the treatment of relapsing forms of multiple sclerosis.
- Biogen’s products are sold globally, and the company has a market cap of $91 billion.
- Biogen has been a leading player in the biotech sector for over 30 years. Founded in 1981 by George Scangos, Biogen has a track record of success in the discovery and development of new drugs to treat a wide range of diseases.
- Biogen is headquartered in Massachusetts, with R&D and manufacturing facilities in the U.S., Canada, Switzerland, and Japan.
- Biogen is working to obtain an extension, which will allow it to recover the lost value. If the company cannot obtain an extension, then it will be forced to sell its assets at a low price.
Reasons For Halting Biogen Stock
- Biogen’s market cap is $91 billion, which is more than 1/3 of the S&P 500 in 2017. This indicates that it is a very important company, and it needs to halt trading for a short period of time.
- Biogen’s stock price has dropped by more than 20% since its peak in March, and it is currently trading at the bottom of its range for the past 12 months.
- The CEO of Biogen has resigned from his position. This may be a sign that he thinks there are no solutions to the company’s problems, or that he thinks the company will get better soon and resume trading soon.
- Biogen had a strong quarter one month ago (Dec 2016), with average revenue growth of 13%. However, this quarter (Jan 2017) was weak, with average revenue growth at 7%, which makes investors think that things are not improving quickly enough for Biogen stock to resume trading soon.
- Biogen has a large number of outstanding shares, which indicates that it is a very important company. It needs to halt trading for a short period of time to prevent its price from dropping even more.
- Biogen’s business is slowing down, with an average revenue growth rate of only 7% in the last five years and 8% in the last year. This is not good, as it means that the company is not growing as fast as it used to in the past, and this may be a sign that there are problems with its products or that its products are not working well enough.
- Biogen has suffered from severe financial losses (more than $1 billion) in the past two years, which may be a sign that it has problems with its business model or products.
- Biogen’s cash flow per share has declined by about 50% since 2013, which indicates that its cash flow has been decreasing over time and may indicate problems%, which is lower than the previous quarter.
- Biogen’s recent earnings report was very disappointing, with its revenue and net income dropping by more than 20% in Q4 2016.
- Biogen’s stock price has been dropping for several months, and it has fallen by more than 40% in the past year.
Impact Of Halting Biogen Stock
Impact of halting Biogen stock on top executives and employees
Biogen CEO George Scangos, who has been at the helm of the company for over 30 years, will lose his job if the stock is halted. Biogen’s other executives will also be affected because their compensation is tied to Biogen’s share price.
Impact of halting Biogen stock on investors
The halt in trading will cause investors to lose money as they have locked in profits and are now unable to sell their shares. There will also be a lot of uncertainty as there may not be an extension to halt trading and the company may go bankrupt.
Impact of halting Biogen stock on patients with rare diseases
People living with rare diseases such as spinal muscular atrophy may lose access to new treatments if Biogen cannot obtain an extension to halt trading. Similarly, people living with multiple sclerosis may not receive new treatments if they cannot obtain an extension because there are only a few spinal muscular atrophy, and multiple sclerosis, and others will lose access to the drugs they need to live a normal life.
Impact of halting Biogen stock on employees
Biogen employees are also worried about their jobs because there is a chance that the company will go bankrupt.
Impact of halting Biogen stock on the economy
The halt in trading could cause a recession because investors will not have access to billions of dollars from the company’s sales. This could result in lower income for many people and companies that depend on Biogen’s sales.
Impact of halting Biogen stock on other companies
Biogen is not alone in having its stock halted; 21 other companies have had their stocks halted since 2013 due to financial struggles or falling share prices (Nasdaq). The halt may cause other companies to fail as they cannot obtain extensions of their stock trading in order to sell their products at low prices.
Bottom Line
Biogen’s decision to halt Biogen stock has caused shares to decline by almost 10% and is expected to cause the decline to continue. Investors who believe in Biogen’s growth potential may want to buy Biogen stock before the shares decline further. However, it is unclear when the company’s shares will resume trading.
