Biogen Stock: Will The $8 Billion Opportunity Materialize For Alzheimer's Drugs? – Investor's Business Daily

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Biogen stock popped Thursday after an analyst suggested the biotech company could reap $8 billion in sales of its Alzheimer’s treatments — assuming everything lines up properly.
But hours later Biogen (BIIB) began laying off employees as part of what it calls a cost-savings initiative. The company announced its plan to save $500 million in December. Biogen didn’t say whether the layoffs are connected to a slow launch for its approved Alzheimer’s drug, Aduhelm.
However, an official with Biogen reportedly told Endpoints News that two-thirds of the Alzheimer’s sales team and all of the Alzheimer’s field leaders had been laid off. The news comes after RBC Capital Markets analyst Brian Abrahams upgraded Biogen stock on hopes for its Alzheimer’s drugs.
On today’s stock market, Biogen stock rose 1.7% to 211.23.
Biogen says the layoffs are just part of its cost-savings plan. The company also isn’t filling some open roles.
“In support of these measures, some of our colleagues in the U.S. were recently informed that their roles are being eliminated,” Biogen said in a statement. “These changes will help the company remain flexible so additional investments can be made in our pipeline and other strategic initiatives.”
Now, Biogen is looking ahead to a Centers for Medicare and Medicaid Services decision around the controversial Alzheimer’s drug, Aduhelm. As it stands, CMS will reimburse the costs of Aduhelm for patients enrolled in clinical studies.
But regulators will issue their final decision in April and could broaden coverage. Further, Biogen is working on another Alzheimer’s drug called lecanemab.
RBC’s Abrahams sees an $8 billion peak opportunity if the CMS decision comes out in Aduhelm’s favor and if Biogen succeeds with lecanemab. Both drugs target beta amyloid, an abnormal protein that builds up in the brains of Alzheimer’s patients. He upgraded Biogen stock.
“Our recent doctor survey work suggests that despite all the negative publicity, Alzheimer’s physicians would have sufficient appetite to prescribe beta-amyloid antibodies to support multibillion-dollar sales,” he said in a report to clients.
The Food and Drug Administration approved Aduhelm for patients with mild cognitive impairment due to Alzheimer’s disease. Roughly 17%-28% of Alzheimer’s patients are eligible for treatment based on these criteria, Abrahams says.
Based on a physician survey, he estimates that 10% of treated patients would receive Aduhelm if regulators decide to reimburse the cost of treatment for patients not enrolled in clinical studies. That could help reinvigorate Biogen stock.
He acknowledged the uncertainty of targeting beta amyloid in Alzheimer’s treatment. Aduhelm is the first drug that changes an underlying mechanism of Alzheimer’s disease. It removes beta amyloid. But it’s still not clear whether that leads to a cognitive benefit. Biogen is still running tests.
But the survey suggests doctors are open to trying it. Abrahams upgraded Biogen stock to an outperform rating.
“This indicates if there were any meaningful near-term (National Coverage Determination) loosening, and/or if the lecanemab Phase 3 (study) reads out positively in the third quarter, doctors would be open to using Biogen’s antibodies,” he said.
Abrahams also raised his price target on Biogen stock to 248 from 227.
Shares have fallen about 50% after Aduhelm received Food and Drug Administration approval in June.
“At current levels less than 210, shares appear to be baking in less and less for Alzheimer’s which should also limit downside risk on additional near-term developments and improve the overall setup,” he said.
Biogen still jumped Thursday, but shares remained below their key moving averages, according to MarketSmith.com.
He suggests Biogen could see just 11% downside in a worst-case scenario — regulators retain their strict ruling on Aduhelm coverage and lecanemab flops in testing. He also expects “some value-creating business development/restructuring to ensue.”
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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