Biogen Has An $8 Billion Alzheimer's Opportunity — Will It Materialize?

 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.

As it stands, the Centers for Medicare and Medicaid Services will only cover the cost of Biogen's (BIIB) drug, 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 Capital Markets analyst Brian 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.

In morning trading on today's stock market, Biogen stock rose 2.2% near 212.40.

Biogen Stock: Upside With Alzheimer's Progress

Aduhelm is approved 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.

Shares Remain Below Moving Averages

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."

https://www.investors.com/news/technology/biogen-stock-will-the-opportunity-materialize-for-alzheimers-drugs/