Biogen Stock Leaps as Signs Point to FDA Approval for Its Alzheimer’s Drug - Barron's

Aducanumab targets the plaque that forms in brain cells of Alzeheimer’s patients.

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Biogen’s fortunes reversed on Wednesday. Ahead of a Friday meeting on the company’s request to market a treatment for Alzheimer’s disease, the U.S. Food and Drug Administration published reports that suggest it favors approval.

The company’s stock (ticker: BIIB) was up 42% early Wednesday afternoon, to $353, on nine times its recent average daily volume. That nearly retraced the ground lost since initial excitement about the investigational drug aducanumab sent Biogen stock to $370 in 2018. Since then, the drug’s outlook plunged and soared as the company and scientists evaluated data from conflicting clinical trials.

On Wednesday, Wall Street scrambled to upgrade its forecasts, after FDA filings showed the agency’s willingness to give the benefit of the doubt to the ambiguous trial data—moved, perhaps, by the lack of options for Alzheimer’s patients.

At Friday’s meeting, the FDA will convene outside advisors to consider Biogen’s approval request. The agency usually follows the recommendations of these advisory committees, but not always. One of the FDA’s briefing documents for the meeting noted: “There hasn’t been an approval of a novel medication for the treatment of Alzheimer’s disease since 2004.”

Aducanumab targets the plaque that forms in brain cells of Alzeheimer’s patients. After initially concluding that its drug had failed its Phase 3 trial, Biogen re-examined the data and found what it says is evidence that the treatment works.

In its briefing documents, the FDA staff agreed. It said the reanalyzed Phase 3 trial “provides primary evidence of effectiveness,” which is further supported by chemical changes detected in patients, as well as evidence from an earlier Phase 1 study.

In a note following Wednesday’s FDA filings, Wells Fargo Securities analyst Jim Birchenough said he expects Friday’s advisory committee to recommend approval. “While predicting any FDA panel outcome is difficult,” he wrote, “we believe that risk-reward is favorable and view positive recommendation as more likely than a negative vote.”

Birchenough raised his rating on Biogen stock from a Hold to a Buy, and lifted his price target to $390. That is a 15-times multiple of the earnings he predicts for 2021. Investors enjoy downside protection with the company’s cash flow from its multiple sclerosis treatments, he said.

Debate about Biogen’s data continues among Alzheimer’s scientists. One longtime member of the FDA advisory committee—neurologist David Knopman of the Mayo Clinic—recused himself from Friday’s meeting and published an editorial in the scientific journal of the Alzheimer’s Association on Sunday that challenged Biogen’s claims for its contradictory data. Knopman and his co-authors called for another Phase 3 trial.

Two other researchers, who consult for Biogen, defended aducanumab in a rebuttal piece. “We believe the data are sufficient to warrant approval,” they wrote. “Lack of approval would be devastating not only to patients who will lose hope but advocates and the community at large.”

A briefing document by the FDA’s statistical expert seems to align with Biogen’s critics, saying that Biogen’s analysis is flawed and fails to show that aducanumab works. But other filings by agency reviewers conclude that the drug is effective and safe.

Amid all this, Biogen said it would carry out an uncontrolled study of aducanumab’s long-term safety and effectiveness.

Many Wall Street analysts had seen Biogen’s approval prospects as a 50/50 chance, at best. Raymond James analyst Steven Seedhouse had an underperform rating on the stock. In a Wednesday note, he conceded that the FDA documents were “a landslide win” for Biogen and that his thesis was getting “blown up.”

Write to Bill Alpert at william.alpert@barrons.com

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Biogen Stock Leaps as Signs Point to FDA Approval for Its Alzheimer’s Drug - Barron's
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