Warren Buffet shocks Wall Street with Biogen gamble

Biogen is trying to resurrect two failed trials of its Alzheimer’s drug aducanumab – and superstar investor Warren Buffet thinks the volatile stock is worth gambling on as the company prepares for an FDA review.

The pharma is preparing an FDA filing after saying that aducanumab appeared to work in patients treated at a higher dose late last year.

This was despite saying that overall data from the EMERGE and ENGAGE trials did not support approval in March last year.

The decision is down to an effect seen in patients exposed to the higher dose of the drug in an extended dataset that was not available at the cut-off point in March.

Whether the FDA agrees is yet to be seen but Buffet, long seen as one of the most influential US investors, thinks the move could pay off.

Buffet’s Berkshire Hathaway has built a $192 million stake in Biogen, according to a regulatory filing detailing late last week.

Bloomberg reported that Biogen’s stock climbed 1.6% to $338.40 after Berkshire, based in Omaha, Nebraska, disclosed its holding.

It has not historically been a big investor in biotech, although it does have a stake in troubled Teva Pharmaceuticals.

Buffet has also been upping his investment in the supermarket chain Kroger, and had built an investment of $549 million at the end of the year.

However the stake in Biogen is small compared with some of Buffet’s other investments – its investment in Apple was cut by 1.5% in Q4 but was nevertheless value at $72 billion at the end of the year.

The news drew a strong response from twitter, where market watchers expressed surprise at Buffet’s decision.

https://twitter.com/auditor112017/status/1228678580793561090

This is shaping up to be a pivotal year for Biogen – any approval in Alzheimer’s could be worth billions given the size of the market, and the fact that a new drug has not been approved since 2003.

Whether other major investors have the conviction to follow the example of the man known as the “Oracle of Omaha” remains to be seen.