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For Biogen investors, company’s outlook rests on next Alzheimer’s drug

The company’s latest earnings presentation saw analysts press for more details about lecanemab – and how it plans to avoid some of the pitfalls experienced with Aduhelm.

Biogen, in what’s become a pattern over the past two years, spent much of its latest earnings presentation Tuesday answering questions about how a closely watched drug for Alzheimer’s disease could help the beleaguered company rebound.

Until recently, analysts and investors were focused on Aduhelm, a Biogen medicine that, in June 2021, became the first Food and Drug Administration-approved treatment for what’s believed to be an underlying cause of Alzheimer’s. Despite that title, Aduhelm sales have been anemic, as major insurers balked at the medicine’s price and the contradictory data that supported its clearance.

Now, Biogen and its development partner, the Japan-based pharmaceutical firm Eisai, are trying to ensure their next Alzheimer’s drug doesn’t suffer the same fate.

“There are learnings from the Aduhelm situation,” Mike McDonnell, Biogen’s chief financial officer, said during a Tuesday call with investors. “Obviously, there were a number of things on Aduhelm that didn’t go the direction that we had anticipated.”

Biogen and Eisai’s newer drug, called lecanemab, is currently under FDA review for what’s known as an accelerated approval, with a decision expected by Jan. 6.

Eisai, which is leading lecanemab’s development, sought regulatory clearance based on positive data from a roughly 850-person clinical trial. But the case for lecanemab has gotten stronger since last month, when it succeeded in a much larger study of nearly 1,800 participants with early Alzheimer’s. The study found patients given lecanemab declined 27% slower than those on a placebo over an 18-month treatment period.

More detailed data from that study will be presented next month at an Alzheimer’s medical conference. Already, though, the early positive results have convinced Eisai to ask the FDA for a full approval of lecanemab by March, provided the drug first secures accelerated clearance.

Given how vital lecanemab has become to Biogen, analysts on Tuesday’s call probed for more details about the company’s plans to overcome the challenges that beset Aduhelm. In response, executives noted they intend to have a more appropriately-sized commercial infrastructure in place as they launch lecanemab. Biogen had previously built up a large sales team behind Aduhelm, only to later disband much of it as revenue failed to materialize.

Analysts also sought reassurance Biogen remained on good terms with Eisai, which is leading commercialization of lecanemab. Biogen CEO Michel Vounatsos said he’s been meeting with his counterpart at Eisai to discuss co-marketing efforts, and while both parties are still working through specifics, “overall the relationship is sound and solid,” according to Vounatsos.

Yet some on Wall Street aren’t yet convinced lecanemab will fix the broader problems in Biogen’s business, such as a faltering multiple sclerosis drug franchise and a risky pipeline. Danielle Brill, an analyst at the investment firm Raymond James, wrote in a note to clients that her team thinks it’s “unlikely that lecanemab alone can offset the revenue cliff [Biogen] is facing over the next several years.”

Biogen recorded $2.5 billion in revenue between July and September, a 10% decrease from the same three-month period a year prior. Nearly all of the company’s main products experienced year-over-year declines.

However, Biogen did slightly raise its revenue forecast for 2022 to be in the range of $10 billion to $10.15 billion, up from the previous range of $9.9 billion to $10.1 billion.

Biogen shares were down about 2% by noon on Tuesday, to trade at a little under $270 apiece.

Published Oct. 25, 2022

Jacob BellSenior Reporter

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