Investing

How Will the Drop in Biogen's Share Price Hit Buffett's Portfolio?

Among the stocks in Warren Buffet’s Berkshire Hathaway Inc. (NYSE: BRK-B) portfolio, Thursday’s biggest loser was Biogen. Shares of the drugmaker fell by more than 6% following news that competitor Eli Lilly had filed for an expedited review of its own Alzheimer drug, donanemab. The U.S Food and Drug Administration has designated the drug for accelerated approval.

Buffett’s stake in Biogen is relatively small at 643,022 shares, valued at roughly $224.5 million as of Thursday’s closing bell. Buffett owns no shares of Lilly, but counts AbbVie, Bristol-Myers Squibb, Johnson & Johnson, Merck, and Teva among his holdings.

Of those six stocks, AbbVie accounts for 0.92% of the Berkshire portfolio, Bristol-Myers Squibb accounts for 0.71%, Merck 0.51%, Teva 0.18%, Biogen 0.7%, and J&J accounts for 0.2%. Even including Biogen’s nasty drop Thursday, the stock is the best performer among Buffett’s drugmakers, up 42.6% year to date. The soaring share price is largely the result of the FDA’s controversial approval of Aduhelm, Biogen’s Alzheimer drug.

The Lilly announcement pushed that company’s stock to a year-to-date gain of more than 40% based on Friday’s premarket trading. Biogen, meanwhile, is down less than 1% in the premarket session.

Investors had assumed that Biogen would have some period of exclusivity with its Alzheimer drug, but Lilly’s announcement has shortened that period considerably. Biogen had announced an annual treatment price of $56,000 for Aduhelm. According to StatNews, more than 1 million Americans are “likely” eligible for the drug, “a potential budget-buster for Medicare” at $56 billion a year.

If Lilly’s drug is approved, Biogen has a strong competitor with more likely to be on the way. It will be interesting to see what Buffett does with his Biogen stock when he reports his second-quarter holdings, probably some time in August.

Biogen stock trades Friday morning at around $347.00 in a 52-week range of $223.25 to $468.55. The consensus price target on the stock is $407.86. Biogen does not pay a dividend.