The Food and Drug Administration approved Biogen‘s (BIIB) Alzheimer’s treatment, aducanumab, on Monday and Biogen stock rocketed to a record high.
Aducanumab, now known as Aduhelm, is the first novel Alzheimer’s treatment to gain approval in nearly two decades. It’s also the first treatment that targets an underlying pathology of the disease. Other drugs treat the symptoms of the disease. But the approval is accelerated, meaning the FDA is requiring additional testing and can reverse its decision at any point.
That’s likely due to the controversial nature of Aduhelm. The FDA had already kicked the can down the road on it once. Further, experts don’t agree on what causes the neurodegenerative disease, nor how to treat it. And, some say Biogen’s evidence is murky at best.
The FDA acknowledged the heightened attention heading into its review. The agency said it used a “fine-tooth comb” to parse through the data which, it noted, “are not straightforward.”
“We understand that Aduhelm has garnered the attention of the press, the Alzheimer’s patient community, our elected officials and other interested stakeholders,” the FDA said in a news release. “With a treatment for a serious, life-threatening disease in the balance, it makes sense that so many people were following the outcome of this review.”
On the stock market today, Biogen stock soared 38.3% to 395.85. Shares touched a record high at 468.55.
Biogen Stock And Aducanumab
Experts don’t agree on what causes Alzheimer’s disease.
Biogen’s Aduhelm banks on the beta amyloid theory, which suggests the build-up of toxic plaque in the brain is the culprit behind the neurodegenerative disease.
Aducanumab works by removing those beta amyloid plaques. By doing so, Biogen hopes to slow the cognitive decline for Alzheimer’s patients. The FDA agreed with that logic, saying the removal of the built-up plaque is “reasonably likely to predict important benefit to patients.”
Biogen Chief Executive Michel Vounatsos celebrated the win in a written statement.
“This historic moment is the culmination of more than a decade of groundbreaking research in the complex field of Alzheimer’s disease,” he said. “We believe this first-in-class medicine will transform the treatment of people living with Alzheimer’s disease and spark continuous innovation in the years to come.”
In a follow-up release, Biogen said Aduhelm would go for $56,000 annually. That’s the wholesale acquisition price, not the price a patient pays.
Beta Amyloid Is An Older Theory
The beta amyloid approach is one of the oldest theories in Alzheimer’s disease. It also has some high-profile failures, including Biogen’s.
In early 2019, Biogen said aducanumab failed to show a benefit in the two Phase 3 tests known as Engage and Emerge. Biogen stock lost a third of its value then. Months later, the company — and Biogen stock — reversed course. Biogen said the Emerge study actually succeeded.
That was based on an ad hoc analysis the FDA helped complete.
Another failure is Eli Lilly‘s (LLY) solanezumab in 2016. Roche (RHHBY), Merck (MRK), Johnson & Johnson (JNJ) and others have all scrapped studies testing beta amyloid approaches to Alzheimer’s disease.
But Mizuho Securities analyst Salim Syed suggested the FDA’s approval could validate the theory of treatment. The Street is modeling $10 billion in sales for Aduhelm, he said in a report to clients. He kept his neutral rating and 244 price target on Biogen stock.
Panelists Vote Shook Biogen Stock
To gain approval, a drug typically needs two successful Phase 3 studies.
In early November, an advisory committee voted against aducanumab’s approval, saying the one successful Emerge study and a midstage test called Study 103 weren’t enough for approval. Ten panelists voted no, one was uncertain and none voted yes.
Several members of the committee went so far as to pen an op-ed later in the Journal of the American Medical Association, a medical journal. Biogen stock inched down the following day.
In its approval, however, the FDA argued that in all studies it evaluated “Aduhelm consistently and very convincingly reduced the level of amyloid plaques in the brain” dependent on dose and time.
Make Or Break For Biogen Stock?
Many considered the decision to be a binary event for Biogen stock.
The company’s biggest drug, a multiple sclerosis treatment called Tecfidera, is facing generic rivals and sales are sloughing off. Novartis has a gene therapy competing with Biogen and Ionis Pharmaceuticals’ spinal muscular atrophy treatment Spinraza.
For that reason, Biogen stock has been subject to wild swings on aducanumab news.
Wedbush analyst Laura Chico says the drama likely isn’t over for Biogen stock. She sees “tough decisions ahead” as doctors weigh whether to prescribe Aduhelm and insurance companies weigh whether to reimburse for treatment.
She boosted her price target on Biogen stock to 300 from 240, but kept her neutral rating.
Other Biotechs Likely Impacted
The decision could impact other companies in the Alzheimer’s space. Lilly has a new beta amyloid-targeting drug called donanemab. Biogen and Japan’s Eisai are also working on a beta amyloid-focused drug called BAN2401. Lilly stock popped 10.2% to 222.52.
But many others are testing newer approaches to the disease. They include names like Anavex Life Sciences (AVXL), Cortexyme (CRTX) and Athira Pharmaceuticals (ATHA). Athira stock jumped 4.4% and Anavex shares leapt 7.9%. Cortexyme stock closed down 3.5%.
Wedbush’s Chico argues the decision to approve Aduhelm based on the single successful Phase 3 study sets a “lax precedent” for other approvals.
“FDA’s decision creates a challenge for future sponsors with arguably a lax precedent,” she said in a report to clients.