Why Biogen's June 7 Aducanumab PDUFA Date Is A High-Risk, High-Reward Catalyst

As the day of reckoning for Biogen Inc.'s BIIB controversial Alzheimer's product candidate aducanumab draws close, an analyst at Oppenheimer looked at the implications of the binary event for the company.

The Biogen Analyst: Analyst Jay Olson has an Outperform rating on Biogen with a $325 price target. 

The Biogen Takeaways: The Food and Drug Administration is scheduled to rule on Biogen's aducanumab biologic license application by the June 7 PDUFA date.

Oppenheimer sees equal probabilities of aducanumab receiving approval or facing rejection, Olson said in a note.

The shares are likely to move 21% higher if the FDA hands down a positive verdict or 11% lower on the receipt of a complete response letter, he said. 

This equates to a probability-adjusted expected move of over 5% for Biogen shares based on Oppenheimer's model assumptions and implied volatility, Olson said.

The analyst sees the binary event as a "high-risk/reward" catalyst.

"Our 50% POS estimate reflects the deep controversy surrounding aducanumab's potential for FDA approval." 

This is based on the assumption that uptake is only in APOE4 carrier patients with mild Alzheimer's disease; the annual U.S. net price is $30,000; and peak market penetration is around 12%, the analyst said. 

The risk-adjusted peak sales forecast for aducanumab is about $2.7 billion in 2030, according to Oppenheimer. 

BIIB Price Action: At last check, Biogen shares were down 0.93% at $278.39. 

Related Link: Attention Biotech Investors: Mark Your Calendar For May PDUFA Dates