Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Biogen is gambling its future on brains.

The company's intense pipeline focus on brain-disease drugs already gave it one of the biggest risk/reward splits in biotech. A planned spinoff of its hemophilia business announced Tuesday morning suggested even more forcefully that Biogen doesn't have much interest in the whole diversification thing.

Biogen is not for the faint of heart; with Tuesday's news and sales of its main marketed drug slowing, more is riding on its risky pipeline than ever. Shares rose slightly on Tuesday's news, but are down 32 percent since last July.  

On the Outs
Biogen's growth has been slowing, and investors may be scared of the risks in its pipeline.
Source: Bloomberg

Biogen says the deal is about allowing each of the two businesses to reach their full potential, a classic generic spinoff rationale. To be fair, hemophilia drugs aren't a huge part of Biogen's business. But they are a growing source of revenue that at least adds some diversity to the company's sales mix. They were the only Biogen drugs to beat analyst sales estimates in the latest quarter. 

But the company apparently sees more benefit in narrowing its focus than in holding onto them. 

Diversification? Nah.
Biogen is spinning off a small but growing hunk of its business, and doubling down on its neurology focus
Source: Bloomberg

The company is now relying on major pipeline bets on things like new treatments for Alzheimer's disease and multiple sclerosis. Its leading cash cow at the moment, multiple sclerosis drug Tecfidera, is not growing as quickly as some had hoped. The drug made up 34.7 percent of sales in the most recent quarter. Analysts once estimated the drug's sales might peak at $9 billion annually, according to Bloomberg Intelligence. But consensus estimates now don't have it beating $5 billion. Biogen's sales growth is not what it once was, to put it lightly: 

Falling Flat
Biogen's sales growth has slowed to a comparative trickle over the past year.
Source: Bloomberg

There's a good reason that efforts to develop drugs for nervous-system diseases -- though potentially lucrative -- make investors antsy. There's a history of prominent failures, particularly for drugs that try to actually change the course of debilitating diseases rather than just ease symptoms. It's been more than a decade since a new Alzheimer's treatment was approved by the FDA. Pfizer, Johnson & Johnson, and Baxter have all suffered high-profile failures in this area. 

But Biogen's hopes for turning itself around are now pretty firmly fixed there.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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