Berkshire Hathaway Inc., a U.S. based multinational investment group which once was a stakeholder of Biogen, has pulled out its stake from the biotech worth $180 million, according to securities filing.
The particular decision taken by the Oracle of Omaha, Warren Buffett, and the controversial approval of Biogen’s Alzheimer’s disease drug by the FDA in early June, were somewhat parallel events that took place in the second quarter of 2021.
This controversial approval of the drug, Aduhelm, opened up a potential $10 billion market for the biotech making stocks of the company touch new heights.
The U.S. based multinational conglomerate holding company built its stake in Biogen in the late 2019. It was the time when the biotech attempted to file its drug for approval, following the not-so-good analysis of the data from phase III trials of Aduhelm.
Berkshire built its stake in Biogen by purchasing 648,447 shares worth $192.4 million ($280 per piece) by the end of 2019. Though it had reported 643,022 shares worth $179.9 million by the end of first quarter this year.
The stock price of Biogen skyrocketed following the Aduhelm’s approval by the FDA, which got as high as $415 per share, which could have yielded 39% return ($79 million) to Berkshire on its holdings in the biotech, that too in a year and half.
While it is still uncertain as to why Buffett decided to abandon Biogen in the midway, the controversial approval of Aduhelm facing a negative feedback from public and its excessive cost hints possibly at the reason.
Other than Biogen, Berkshire also had halved its holdings in the Merck and Co. during the same quarter. It had brought down its holdings in the New Jersey based pharma from $17.88 million to $9.16 million by the end of June 2021.
However, the same time, the multinational holding firm had reported its new stake of $1.55 million in the New Jersey based pharmaceutical company Organon and Co.
Along with that, the Nebraska based holding firm also had reportedly reduced its shares in AbbVie and Bristol Myers Squibb. By the second quarter, the holding firm had dropped its AbbVie shares of worth $2.47 billion to $2.31 billion.
When COVID-19 pandemic struck the world fueled up investments in overall healthcare industry, the Nebraska based holding company also took chance by building its stakes in renowned pharma companies in the third quarter of 2020. One of them was Pfizer where it bought relatively lesser shares worth $136 million. But unfortunately, the New York based pharma company couldn’t make it to the Berkshire’s list of investments any further, as the holding firm pulled out its shares in the pharma by the very next quarter.
Warren Edward Buffet, CEO of Berkshire Hathaway, is globally recognized for his famous saying: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” However, pulling out its stakes from such renowned healthcare companies like Biogen and Pfizer, that too in a short run, seems to go against Buffet’s investment logic. One can only wonder what made Pfizer and Biogen land on the chopping board.