The next few days will be a turning point for Biogen, but they may also be a turning point for the 47 million people around the world who suffer from Alzheimer’s. The US Food and Drug Administration (FDA) will decide on Monday at the latest whether to approve the drug that this company has developed against the terrible neurodegenerative disease.
The drug, called Aducanumab, has been in testing since 2015 , but its investigation has been problematic, with a cancellation of the investigation in 2019 that would resume months later. Now comes the moment of truth: the regulator will have to decide whether the test results are valid enough to allow it to be marketed, in what would be the first drug to fight Alzheimer’s in the last 20 years.
Biogen is thus facing a critical moment that more dovish analysts, such as Brian Abrahams of RBC Capital Markets, believe it could swing the company’s share price up or down 30% . Some, like Michael Yee of Jefferies, pointed out less than a month ago that titles could rise as much as 70% if the drug is approved, and fall 40% if they are denied by the FDA.
Your quote, marked by Alzheimer’s
The company is up 9% so far this year, after a turbulent 2020 that started trading at almost $ 300 and closed at $ 250.
However, 2019 was even more volatile precisely because of Aducanumab. When on March 21 of that year it announced that it was canceling the investigation in its Phase 3, Biogen plummeted 30%, which was its worst trading day in 14 years and losing 18,000 million dollars in capitalization .
Some of that drop was recovered months later, when he resumed the application to approve the drug, finding it had positive effects in the early stages of the disease. Its rise of 26.1% in that trading session made it its best day on the stock market in two decades and increasing its capitalization by almost 11 million.
A decision that will be controversial
However, today everything is back on the wire. Last November, an independent committee of the US government voted against the approval of the drug, considering that there is no conclusive evidence on the improvement of patients thanks to its use.
Given this prospect, analysts are inclined that the FDA will give the drug the green light. UBS’s Colin Bristow estimates a 60% chance of approval – even 90% if the decision were postponed – while BTIG’s Tom Shrader predicts a 70% chance but a “modest peak in sales” of the medicine. Goldman Sachs, however, estimated in 2019 that the revenue that Aducanumab would bring to Biogen could amount to $ 12 billion.
It is estimated that, if approved, the treatment will cost about 40,000 euros per year and would mean an improvement of up to 20% in the cognitive capacity of patients during the first phase of the disease.
In addition to biotech-oriented investment funds, other large companies are closely watching the FDA’s decision. At the end of the first quarter, Blackrock owned 9% of the shareholding and Vanguard was close to 8%. Among other big names were also JP Morgan, with more than 1,000 million dollars invested to exceed 2.5% of the titles.