close icon

Biogen, Elliott Wave and the Quest for Alzheimer Cure

Biogen is one of the top-notch firms in the biotech space. With sales of over $12.7B in 2019, the stock has been very generous to investors in the past. In fact, it is one of only five companies mentioned in Christopher W. Mayer’s book “100-Baggers” that have returned 100 to 1 in under six years.

Unfortunately for Biogen holders, it wasn’t the past six years when that happened. The stock reached an all-time high of $442 a share in March, 2015, and has been trading below this level since. Yesterday, it closed at $241.55, down over 45% from its 2015 peak.

In recent years Biogen’s stock price has been reflecting the uncertainty around two of the company’s drugs – Tecfidera and Aducanumab. The first one accounts for over 30% of the company’s sales, but its patent protection has been under constant attacks in court from generic rivals. The second one was Biogen’s Alzheimer cure candidate, which, if approved, was practically guaranteed to become a blockbuster.

Making Sense of Biogen ‘s Alzheimer Conundrum with Elliott Wave Analysis

We, at EWM Interactive, are complete laymen when it comes to biotech. We had absolutely no idea what the outcome for these two drugs will be. Apparently, even Biogen’s management had no idea. However, from an Elliott Wave perspective, which is our specialty, Biogen’s Alzheimer saga makes sense. Let’s take a look.

Biogen 's Alzheimer Saga Makes Elliott Wave Sense

It all started with an impulsive decline down to $205 a share by late-June, 2016. From then on, the stock price went up and down in a wide range, in response largely to news about Biogen’s Alzheimer candidate. Sharp moves of 20% to 40% in both directions were not uncommon.

The shares rose sharply on July 5th, 2018, after positive Phase 2 trials. Then, they fell brutally on March 21st, 2019, after the company reportedly terminated studies of the drug due to lack of efficacy. Just seven months later, however, on October 22nd, 2019, Aducanumab was brought back from the dead. Biogen stock surged 40% that day.

Meanwhile, troubles for Tecfidera mounted. In August, 2020, a generic version of the drug was approved after a federal judge had previously invalidated its patent. By early-November, 2020, BIIB was back down to the low $240s.

BIIB’s Roller Coaster Produces a Clear Triangle Pattern

Hope was still alive, though, as the Food and Drug Administration said Biogen’s Alzheimer candidate was “highly persuasive” in a Phase 3 trial. November 4th saw another 40% rally on the news. Unfortunately for both investors and patients, their optimism was misplaced. On Friday, November 6th, the FDA’s advisory committee gave the drug a thumbs down, saying it wasn’t effective enough. When the market opened on Monday, November 9th, Biogen stock was down 30% again.

What is fascinating is how all these news and events fit together to form a textbook triangle pattern. It is labeled A-B-C-D-E in wave (B). If this count is correct, a huge (A)-(B)-(C) zigzag correction has been in progress since the 2015 top. This means the latest crash must be part of wave (C).

Its targets lie beneath the bottom of wave (A), making the sub-$200 levels reachable for the bears. $180 and even $150 a share make sense from here, not only because of the Elliott Wave logic, but also because Tecfidera sales are projected to fall off a cliff and Aducanumab’s death is just a formality now.

Once there, Biogen would probably be in the bargain bin and buyers should start to slowly emerge again. In the biotech space, one never knows, but according to the Elliott Wave theory, when a correction is over, the larger trend resumes. Prior to March 2015, the stock was clearly in an uptrend…

Sources: Seeking Alpha

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

GameStop Stock Can Lose 40% Short-Term

GameStop Corp., once the larger video game retailer, has been losing ground in recent years. The switch to e-commerce and direct-to-consumer trends led to a steady decline in GameStop’s sales. The intruduction of cloud-gaming is only adding to the company’s problems. On that backdrop, it is not surprising that the stock has been in a…

Read More »

Tesla: Elliott Wave Aside, This is Totally Irrational

Tesla is up over 13% in pre-market trading today after news of its scheduled inclusion in the S&P 500 index on December 21st. The stock’s phenomenal rise since the COVID-19 crash led the company to a market cap of over $400 billion. This makes it much bigger than established rivals such as Volkswagen, Toyota and…

Read More »

Ryanair Stock, Unlike Its Planes, Can Fly Again Soon

Few industries have been hit harder by the COVID-19 pandemic restrictions than the airlines. Flight numbers and passenger traffic have been significantly reduced in Europe and the U.S. since March. Even low-cost carriers like Ryanair were not spared. Ryanair’s passenger traffic plunged by 99.5% in May and is still down 64% in September. Apparently nobody…

Read More »

General Mills Bearish Elliott Wave Cycle Spells Trouble

The last time we wrote about General Mills stock was over a year and a half ago. Following a bullish reversal Elliott Wave analysis helped us correctly predict in late-December 2018, the stock was trading above $51 a share in late-March 2019. It was a 33% recovery, whose structure, however, didn’t look quite as anticipated.…

Read More »

Fortinet Is Strong, but The Stock Can Slide 40% Anyway

Fortinet Inc. provides cybersecurity solutions to large and small businesses and enterprises. The company went public on the NASDAQ exchange in late-2009. Great timing, as it allowed it to enjoy the phenomenal post-crisis bull market. In fact, by July 2020, FTNT stock was up 794% since its IPO, easily beating the S&P 500’s return over…

Read More »

NIU Stock, Down 18% This Week, Can Fall Further

E-scooters have been all the rage in the past couple of years. Much friendlier to the environment and often more convenient as an urban transportation option than cars, electric scooters were quick to gain popularity. Niu Technologies, a Chinese manufacturer, has been bearing the fruits of this trend. The company’s ADS trade on the NASDAQ…

Read More »

Barry Callebaut Can Drop 25% as Fourth Wave Unfolds

Barry Callebaut AG is one of the largest cocoa processors and chocolate manufacturers in the world. Formed by the 1996 merger of Callebaut and Cacao Barry, the company produces over two million tonnes of cocoa and chocolate per year. Barry Callebaut went public on the SIX Swiss Exchange in 1998 and has been quite rewarding to investors ever since.…

Read More »

More analyses