Biogen Analysts Debate About-Face On Aducanumab: 'Path To Market An Uphill Battle'

Biogen Inc BIIB shares rallied strongly Tuesday after the biotech said it plans a regulatory filing for its Alzheimer's drug aducanumab, which the company had written off back in March.

The Analysts

Morgan Stanley analyst Matthew Harrison maintained an Underweight rating on Biogen and raised the price target from $212 to $262. 

Mizuho Securities analyst Salim Syed maintained a Neutral rating and $235 price target.  

CFRA analyst Kevin Huang maintained a Hold rating and lifted the price target from $262 to $352.

Bank of America Merrill Lynch analyst Geoff Meacham reiterated an Underperform rating and $200 price target.

Morgan Stanley: Withholding Judgment For Now

Biogen's third-quarter beat was orchestrated by Spinraza sales outside of the U.S., better CD20 royalties and better margins, Harrison said in a Wednesday note.

The analyst named the following takeaways from a call with Biogen: 

1. The company believes the futility analysis of aducanumab did not adequately consider overall patient exposure to a high dose.

2. Following two type C meetings with the FDA, Biogen interprets the agency's comments as positive.

3. Tentative approval of Vumerity was confirmed, although the necessary steps for full approval were not confirmed. 

4. Biogen expects a readout from the Phase 2 trial testing BIIB092 in PSP by the end of 2019. 

Harrison said he is withholding judgment on aducanumab for now. The analyst sees greater disclosure coming with the CTAD conference; acceptance of the filing by the FDA; and an Adcom meeting, possibly in the second half of 2020, as key steps.

"We add 35% risk-adjusted aducanumab sales into our model but remain UW given our concerns around the updated filing strategy and base business." 

Mizuho: Approval Not Guaranteed, Questions Remain

The headline sounds positive, but Tuesday's news alone does not guarantee approval, and questions remain, Syed said in a Tuesday note. 

Biogen has yet to disclose any patient-level data, the analyst said, adding that it would be nice to see how individual patients fared across plaque reduction vs. clinical benefit.

The fact that two identically designed studies produced different results is confounding, Syed said.

Mizuho would like to understand to what extent the FDA is on board given the history of this drug and the beta amyloid hypothesis in general, he said. 

"For one, we should expect an advisory committee here given all that we know today, but color from BIIB would be helpful here." 

CFRA: Early 2020 Filing Likely

Aducanumab, if approved, could be the first FDA-approved therapy to reduce clinical decline in patients with Alzheimer's disease — and the first therapy showing that targeting beta amyloid is a viable treatment method, Huang said in a Tuesday note. 

The filing could occur in early 2020, the analyst said. 

The results should translate positively to BAN2401, which is in Phase 3 trials for Alzheimer's disease, he said. 

The third-quarter earnings beat was due to lower-than-expected tax count, share repurchase activity and high margins, the analyst said.

CFRA raised its 2019 earnings per share estimate for Biogen from $32.22 to $33.23 and its 2020 estimate from $31.99 to $32.09. 

BofA: Path To Market An Uphill Battle

The aducanumab news represented a major turnaround after Biogen reported discontinuation of development in March following a futility analysis that indicated two Phase 3 studies — ENGAGE and EMERGE — may not meet primary endpoints, Meacham said in a Tuesday note. 

The original futility analysis was erroneous, with a smaller subset of patients who had less exposure to higher doses, the analyst said. 

"With EMERGE meeting the primary endpoint and a subset of ENGAGE patients supportive of the EMERGE results, the company now believes there is sufficient basis to support a regulatory filing." 

Given the considerable unmet need, Meacham said there are likely to be lengthy discussions, with high interest on the part of regulators. 

Biogen's statement that the FDA supports a filing does not equate to an endorsement of the risk-benefit profile, the analyst said. 

"We still see the path to market as an uphill battle, beyond significant questions over the original futility analysis, with so far unequivocal results, with differing benefit levels across the two studies and between doses." 

BofA said it will revisit its opinion on the stock when it has greater clarity and confidence on the submission.

Price Action

Biogen shares were down 0.38% at $280.79 at the time of publication. 

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