Biogen stock bounded higher Wednesday after the Food and Drug Administration posted "relatively benign" documents, suggesting the agency likely plans to approve the company's Alzheimer's treatment.
A panel of advisors to the FDA will meet Friday to discuss the drug, Leqembi, which won accelerated approval in January. Now, the FDA will consider converting that to a traditional approval based on the results of a confirmatory study called Clarity-AD.
"Overall, the briefing documents appear relatively benign, and we think the most likely outcome is a positive vote, followed by full approval," Wedbush analyst Laura Chico said in a note to clients.
On the stock market today, Biogen stock rose 1.7% to close at 304.90. Shares bounced off their 50-day moving average, according to MarketSmith.com.
Biogen Stock: Comparisons To Aduhelm
Biogen and its partner, Eisai, have a long and storied history in Alzheimer's treatment, and analysts were quick to make comparisons to the companies' first approved drug, Aduhelm.
Panelists voted against Aduhelm in its advisory committee meeting, but the FDA gave it accelerated approval anyway. In response, the Centers for Medicare and Medicaid Services said it plans to only cover patients enrolled in the Aduhelm confirmatory study. Meanwhile, Biogen quickly unwound its Aduhelm marketing efforts.
Leqembi and Aduhelm use the same mechanism. Both remove abnormal plaque in the brain called beta amyloid. But while Aduhelm had one failed and one successful Phase 3 study, Leqembi now has two successful final-phase studies.
"The briefing documents (for Leqembi) read super clean — don't really see any surprises here at all," Mizuho Securities analyst Salim Syed said in his note to clients.
He cited Aduhelm's briefing documents that had 130 pages compared with just 35 for Leqembi. Further, panelists had four voting questions for Aduhelm and just one for Leqembi.
This is "essentially showing a much simpler story," he said, offering a buy rating and 340 price target on Biogen stock.
Alzheimer's Treatment Faces Safety Questions
The FDA laid out Leqembi's effectiveness, noting no new red flags or concerns, RBC Capital Markets analyst Brian Abrahams said in a note.
Meanwhile, the safety section is a bit longer. FDA reviewers noted a risk of swelling in the brain known as amyloid-related imaging abnormalities, or ARIA. This is a common side effect of anti-amyloid treatments like Leqembi.
Further, there is an increased risk of ARIA in patients with a certain genetic disposition and those using blood thinners. The agency also noted the risk of an allergic reaction to Leqembi.
"But there isn't anything meaningfully new called out and the FDA concludes that 'the risks can be described in the prescribing information and do not appear to preclude traditional approval of (Leqembi),' " Mizuho's Syed said.
Abrahams also kept his outperform rating and 340 price target on Biogen stock.
Biogen's Future Remains Uncertain
Despite excitement in Alzheimer's treatment, Wedbush's Chico is more reserved on Biogen's future.
Unlike its decision on Aduhelm, Medicare will reimburse for treatment with Leqembi if the drug is fully approved. But Medicare requires enrollment in a patient registry. Chico calls this a "key, gating factor."
Biogen is facing a steep decline for its multiple sclerosis treatments as generics chomp away at sales.
"Biogen's expected declining revenue growth profile differs from its peers, and requires much to go right with Leqembi and (depression treatment) zuranolone launches," she said. "Despite the likely approval, we do anticipate challenging launch logistics, as registry details still need to come together."
She kept her neutral rating on Biogen stock, but believes "an encore of the Aduhelm drama seems unlikely."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
