Key Points Buffett's Berkshire Hathaway surprisingly bought a stake in a biotech, Biogen, earlier this year. Biogen's fortunes hinge largely on FDA approval of experimental Alzheimer's disease drug aducanumab. The prospects for aducanumab winning approval look bleak after an FDA advisory committee voted against the experimental drug. Our experts issued a rare "Double Down" Buy alert on this one stock... Learn more. Warren Buffett isn't exactly viewed as a big gambler. Sure, the Oracle of Omaha takes risks with his investments. For the most part, though, his risks are calculated ones that work in his favor. But earlier this year, Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) invested in what can accurately be described as one of the legendary investor's riskiest wagers in years. Now, that risky bet is on the brink of bombing big time. Image source: Getty Images. Berkshire's sole biotech There's exactly one biotech stock in Berkshire Hathaway's investment portfolio. A regulatory filing with the Securities and Exchange Commission in February revealed that Berkshire had bought more than 648,000 shares of Biogen (NASDAQ: BIIB). Since then, Berkshire has sold around 5,400 shares. It seems likely that one of Buffett's two investment managers actually picked the biotech. However, Buffett apparently went along with the decision even if he didn't personally select Biogen. Why would Berkshire buy Biogen? The stock was (and still is) cheap based on its price-to-earnings ratio. Biogen generates steady and strong cash flow thanks mainly to its multiple sclerosis (MS) drug franchise. Its product lineup also includes blockbuster spinal muscular atrophy drug Spinraza. Perhaps more importantly, though, Biogen represented an opportunity for a huge payoff in relatively short order. The company had seemingly thrown in the towel on experimental Alzheimer's disease drug aducanumab in early 2019. However, Biogen announced in October of last year that it planned to file for FDA approval based on a new analysis of late-stage clinical studies evaluating aducanumab. Some analysts predicted that aducanumab could generate peak annual sales of up to $10 billion. Long odds It now seems likely that aducanumab will instead achieve peak annual sales of $0. Last week, an FDA advisory committee voted overwhelmingly against the drug. Eight of the 11 FDA advisory committee members voted that one positive late-stage clinical study was insufficient to determine that aducanumab was effective. Seven of the committee members voted "no" when asked if a smaller positive study provided enough evidence that the drug is effective, with the other four members stating that it was uncertain. The only good news for Biogen was that five committee members voted that aducanumab removed amyloid beta plaques from the brains of patients with Alzheimer's disease, versus six who voted that it didn't achieve this goal. The FDA doesn't have to accept the opinions of the advisory committee, but has a history of doing so. One study conducted by McKinsey found that the FDA approved drugs 88% of the time when endorsed by an advisory committee, and didn't approve drugs 86% of the time when committees didn't endorse approval. In this case, some observers think the FDA's credibility is on the line. Baird analyst Brian Skorney wrote to investors, "Approving aducanumab, in the face of such an overwhelmingly negative vote and commentary, is virtually impossible and would destroy the agency's reputation at a very tenuous time for the regulator, ahead of potential actions on COVID-19 vaccines." A biotech blunder? Biogen hasn't been a great stock for Berkshire, even excluding the FDA advisory committee's thumbs-down vote. It was the second-worst performer in Berkshire's entire portfolio in October. If aducanumab doesn't win FDA approval, the stock could really bomb. Without aducanumab, Biogen's growth prospects look very weak. The company's MS drugs are losing market share in the face of competition from both branded and generic rivals. Spinraza is no longer the growth story it once was. Biogen's late-stage pipeline isn't particularly impressive. The FDA has until March 27, 2021, to make its final approval decision on aducanumab. It's quite possible that Berkshire's and Buffett's riskiest bet in years could also become its biggest blunder. 10 stocks we like better than BiogenWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Biogen wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of October 20, 2020 Keith Speights owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends Biogen and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.Source