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Beset by challenges with its Alzheimer’s drug, Biogen pivots

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Jaimy Lee

Biogen Inc.’s /zigman2/quotes/201531540/composite BIIB -0.78% decision to let go of its CEO and scrap commercial plans for its controversial Alzheimer’s disease drug indicates there isn’t much of a future for a drug that was once at the center of the company’s strategy.

The stock gained 1.8% in trading on Tuesday after announcing the news.

The company, which has not yet named a replacement for outgoing Biogen CEO Michel Vounatsos, said it would forgo a sales and marketing enterprise for Aduhelm, aiming to save $500 million, while putting “minimal resources” into patient-access programs for the drug.

“We’re now looking forward as we work to advance our broader pipeline,” which includes lecanemab, another Alzheimer’s disease drug, and a depression drug it’s developing with Sage Therapeutics Inc. SAGE , Vounatsos told investors, according to a FactSet transcript of the first-quarter earnings call.

Aduhelm’s complicated history

The announcement follows years of concern from physicians, regulators, and analysts about the drug’s effectiveness and the manner in which it was approved by the Food and Drug Administration.

The questions started in 2019 when the company halted development of aducanumab, saying the experimental drug wouldn’t meet the primary endpoints in a last-stage clinical trial. Biogen’s stock tanked. Later that year, the company announced that a fresh take on the clinical data showed the therapy worked, and it would seek FDA approval . That decision sent shares soaring. 

But not all of Wall Street was on board. One analyst memorably told investors that the data for the then-investigational therapy “falls really far short of this standard to anyone but the most ardent Goop subscribers.”

When the FDA approved Aduhelm last June, three of the advisers on an advisory committee quit in protest. A federal investigation into Aduhelm’s FDA approval process is under way. 

Aduhelm’s problems don’t stop there. The Cleveland Clinic and the Mount Sinai Health System said last summer they wouldn’t prescribe the drug to their patients, and the Centers for Medicare and Medicaid Services issued a make-or-break ruling last month saying that Medicare beneficiaries can only get access to class of therapies that include Aduhelm if they participate in a clinical trial.

“This decision effectively denies all Medicare beneficiaries access to Aduhelm,” Vounatsos said.

UnitedHealthcare, the insurance arm of UnitedHealth Group /zigman2/quotes/210453738/composite UNH -0.63% , said Sunday that its coverage policy for Aduhelm is consistent with the one established by the CMS.

What’s next for Biogen

Now factor in that Aduhelm has generated less than $6 million in revenue since it received approval from the Food and Drug Administration in June of last year, and it becomes clear why Biogen is shifting its focus. 

Biogen reached “a pivot point, effectively throwing in the towel on Aduhelm and announcing a CEO transition,” RBC Capital Markets analyst Brian Abrahams told investors on Tuesday. “We believe these changes will be well received over the long term and give the company a fresh start in refocusing R&D priorities and right sizing opex.”

The company isn’t giving up on Alzheimer’s drug development altogether. It’s got lecanemab in Phase 3 clinical trials, with data expected in the fall. Biogen said it plans to submit this drug for FDA approval in the beginning of next year.

“We remain committed to Alzheimer’s disease,” said Priya Singhal, Biogen’s interim head of research and development. “We are definitely taking all our learnings from the scientific approach but also on how we would approach clinical development.”

Biogen’s stock has declined 13.4% this year, while the broader S&P 500 /zigman2/quotes/210599714/realtime SPX -0.09% is down 12.8%.

/zigman2/quotes/201531540/composite
US : U.S.: Nasdaq
$ 286.84
-2.26 -0.78%
Volume: 590,719
Dec. 9, 2022 2:56p
P/E Ratio
14.63
Dividend Yield
N/A
Market Cap
$41.63 billion
Rev. per Employee
$1.00M
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/zigman2/quotes/210453738/composite
US : U.S.: NYSE
$ 544.47
-3.45 -0.63%
Volume: 1.17M
Dec. 9, 2022 2:58p
P/E Ratio
26.67
Dividend Yield
1.21%
Market Cap
$511.95 billion
Rev. per Employee
$900,337
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/zigman2/quotes/210599714/realtime
US : S&P US
3,959.79
-3.72 -0.09%
Volume: 0.00
Dec. 9, 2022 2:58p
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