Biogen Inc. (NASDAQ: BIIB) is scheduled to release its second-quarter financial results before the markets open on Friday. Thomson Reuters has consensus estimates of $4.10 in earnings per share (EPS) on $2.71 billion in revenue. The second quarter from the previous year had $3.49 in EPS on $2.42 billion in revenue.

The company appears to be dropping some of the bullish hopes for its Alzheimer’s drug candidate. Biogen’s closely watched Alzheimer’s drug candidate, aducanumab, has fallen short of analyst and investor expectations. The initial results appear to have created a mixed view of the road ahead to FDA approval.

At the Alzheimer’s Association International Conference (AAIC), Biogen noted that its 6-mg dose of aducanumab fell short of statistical significance in the Mini Mental State Examination (MMSE) and the Clinical Dementia Rating Scale Sum of Boxes. The drug did worse than the 3-mg arm on the MMSE rating and did not show much difference on the other score.

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For perspective as to why anything but great news is creating concern, Biogen generated a fair amount of enthusiasm surrounding its Alzheimer’s prospects earlier in the year. The lower dose and a higher dose were shown to have initially given positive results. A higher dose of 10 mg even showed statistically significant improvements on the rate of decline for the cognitive and functional measures, while the lower dose was not as statistically significant.

One issue here is that investors have chased anything that resembles positive data in the fight against Alzheimer’s disease. The reason is simple enough: any real improvement from an Alzheimer’s drug would generate mega-blockbuster results.

Merrill Lynch raised Biogen to a Buy rating from Neutral with a price target of $466. The firm cited positive momentum in the pipeline and a stabilization in Tecfidera sales. In the coming months, Biogen will report the Phase 2 data for Tysabri in acute ischemic stroke, Phase 2 for neublastin in neuropathic pain (mid-2015) and Phase 3 for Tysabri in SPMS. The firm views these trial results as high-risk/high-reward catalysts that are skewed to the upside, given low expectations from investors.

Others analysts weighed in on Biogen ahead of its earnings:

• Cowen reiterated an Outperform rating with a $494 price target.
• Deutsche Bank reiterated a Buy rating.
• Baird reiterated an Outperform rating with a $480 price target.
• Piper Jaffray downgraded shares to Neutral from Outperform and lowered its price target to $410 from $485.

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Shares of Biogen were down 0.4% at $389.30 on Thursday afternoon. The stock has a consensus analyst price target of $471.75 and a 52-week trading range of $290.85 to $480.18.

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