News that the US regulator has granted accelerated approval for Aduhelm, the Alzheimer’s disease treatment, saw shares in Biogen (Nasdaq:BIIB) leap 50% from $286.43 to $430.14 on 7 June. Since then however, Biogen shares have been on a downward slide.
Receiving this approval from the US Food and Drug Administration is a significant milestone in the fight against Alzheimer’s. Aduhelm is the first and only Alzheimer’s disease treatment. Biogen has been collaborating with Eisai, a Tokyo-based pharmaceutical company, on the development and commercialisation of Aduhelm since October 2017. The drug, which is a human monoclonal antibody and administered intravenously, works by reducing the build-up of amyloid beta plaques in the brain, therefore slowing down cognitive decline
Fluctuating Biogen share price
While medical experts around the world welcomed the progress, there has been widespread debate about whether there was enough clinical evidence to receive the approval. The news was also marred by the fact that three FDA panel members have resigned as a result of the announcement. Aaron Kesselheim, professor of medicine at Harvard Medical School who was the latest to resign, even issued a damning tweet stating that “Accelerated Approval is not supposed to be the backup that you use when your clinical trial data are not good enough for regular approval.” A week on and the Biogen share price looks to be dropping back and at time of writing is around $404.
We have been here before. In early November 2020, the Biogen share price shot from $247 to $355 on hopes that the FDA would approve the Alzheimer drug. Within days, those hopes were dashed and the share price dropped down to $236.34.
Implementing Biogen’s Forward Strategy
There is undoubtedly a lot riding on Aduhelm. Biogen will now have to conduct a controlled trial to verify the clinical benefits of Aduhelm in patients with Alzheimer’s disease as well as test the drug’s safety and effectiveness.
But the firm also supplies drugs such as US Tecfidera, the multiple sclerosis drug and Spinraza, the drug for spinal muscular atrophy, among others. It has also spent the last four years building the ‘Biogen Forward Strategy’. This strategy claims Michel Vounatsos, Biogen’s CEO, will leverage science and research as well as develop and expand the company’s neuroscience portfolio. Biogen currently has a total of 10 programs either in Phase 3 or filed with regulatory agencies, including in neuropsychiatry, amyotrophic lateral sclerosis (ALS) and ophthalmology. In 2020, the firm added or advanced 12 clinical programs through both internal development and collaborations with the likes of Sangamo Therapeutics, Denali Therapeutics and Sage Therapeutics.
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It is still unclear as to whether the Forward Strategy is paying off. Biogen’s first quarter results show that total revenue decreased 24% from last year to $2,694 million. Multiple sclerosis revenue, including royalties on sales of Ocrevus, decreased 26% to $1,693 million compared to the same period last year. Spinraza revenue decreased 8% to $521 million and biosimilars revenue decreased 6% to $205 million versus the prior year.
But when it comes to pharmaceutical companies, it is worth playing the long game. Even with the controversy surrounding the FDA accelerated approval. If we can draw any conclusions from the latest news about Biogen’s Alzheimer’s drug, it is that it’s not going to be an easy ride for investors, let alone those suffering from the disease itself.
