February 8, 2021 BARRON’S 29
rate $5 billion share repurchases since
December 2019. Analysts have seen
the buybacks as a bet by the company
on aducanumab’s approval; buying its
own shares in anticipation of a spike
when the FDA gives the nod.
“We are of the view that the more
prudent choice would be to save the
cash for [business development] in
case the decision does not go in com-
pany’s favor,” Citigroup’s Bansal
wrote in an October note about the
second buyback announcement.
Biogen defendedthe buybacks.
“Biogen is committed to allocating
capital efficiently, effectively, and ap-
propriately,” the company said in a
statement. “While share repurchases
are one component of our strategy, last
year alone we executed eight business-
development deals that have a total
value of roughly $3 billion.”
If aducanumab makes it to market,
it’s all fine for Biogen.
“The upside is incredible,” says
Colin Bristow, an analyst at UBS, who
says sales of aducanumab could be as
high as $20 billion a year. “They
would have unfettered access to the
Alzheimer’s market for years.”
But if the FDA disagrees, Biogen
could fall hard. The company issued
2021 sales guidance this past week
that fell well short of Wall Street ex-
pectations, even though it included
“modest” aducanumab revenue. In a
note that day, Bansal wrote that if ad-
ucanumab isn’t approved, the conser-
vative guidance “resets the downside
much lower,” and could mean the
stock will drop even further.
Aducanumab’s potential comeback
began months after Biogen said in
March 2019 that an independent data-
monitoring committee had deter-
mined that two large trials of the drug
were failing. (The company still ac-
knowledges that one study failed.)
After an analysis of data that wasn’t
available when the trial was stopped,
it now believes the second study actu-
ally found that patients on a high dose
of aducanumab experienced 22% less
clinical decline than those in the pla-
cebo group.
The FDA’s advisory committee dis-
agreed. The votes of advisory panels
aren’t binding, but the FDA rarely
ignores them. “The chances of this
getting approved in this cycle are ex-
tremely low,” Bansal says. “The panel
was overwhelmingly negative.”
That isn’t reflected in how the stock
is trading, however. Investors are tak-
ing the FDA’s collaboration with Bio-
gen as a sign that the agency wants to
say yes.
In meeting minutes quoted in the
joint briefing document, the FDA said
that the “wholly unique situation” of
the aducanumab program in the sum-
mer of 2019, when Biogen was review-
ing the data it received after the trials
were stopped, required that analyses
of the trial data be done “as part of a
bilateral effort involving” the FDA
and Biogen. The company says that it
worked with the FDA “in a collabora-
tive manner to achieve a maximum
understanding of the existing data
through a working group.”
T
hat collaboration was unusual
enough that the advocacy
group Public Citizen voiced
concerns to the FDA. Asked to
comment on the criticism that officials
had collaborated inappropriately, an
FDA spokesperson said that the
agency could not comment on pending
applications.
“The reality is it probably deserves
to have another study to prove that it
really works,” Leerink’s Goodman
says of aducanumab. “But it’s Alzhei-
mer’s, and that’s why I think things
are different....There’s nothing ap-
proved for Alzheimer’s. And I think
that the [FDA] division head is frus-
trated by that.”
There is undoubtedly an urgent
need to make new Alzheimer’s drugs
available. According to the Alzhei-
mer’s Association, 5.8 million Ameri-
cans are living with the disease today,
including 10% of Americans over 65.
“While the trial data has led to
some uncertainty among the scientific
community, this must be weighed
against the certainty of what this dis-
ease will do to millions of Americans
absent treatment,” an Alzheimer’s
Association executive wrote in a pub-
lic comment submitted to the FDA
advisory committee.
So, it’s easy to understand the pres-
sure on the FDA to say yes. But ap-
proving a drug that might work could
make it harder to find one that defi-
nitely works.
“The reason we have a regulatory
agency is because science is difficult,
and we know that the only way we get
through to correct answers is being
rigorous and empirical,” says Dr. Peter
Bach, director of the Center for Health
Policy and Outcomes at Memorial
Sloan Kettering Cancer Center.
Once a treatment is approved, it
becomes harder to run trials of other,
possibly better drugs. And allowing a
drug company to reap huge profits
from a drug that doesn’t actually work
warps the incentive structure in-
tended to push companies to discover
useful drugs. “I think it would be a
great pity to see the drug approved,”
Bach says.
The FDA is caught in the middle,
and it couldn’t come at a more delicate
time as it seeks to shore up a reputa-
tion for rigor and independence that
has suffered over the past year.
The Biden administration has yet to
name an FDA commissioner; the
agency is being led by a longtime se-
nior official, Dr. Janet Woodcock,
serving in an acting capacity.
If she is given the top job on a per-
manent basis, that could be taken as a
positive sign for aducanumab. That’s
because in 2016, in an eerily parallel
situation, Woodcock backed the ap-
proval of a Duchenne muscular dys-
trophy drug, despite the opposition of
the FDA’s advisory committee and
opponents within the agency. (Despite
the approval, insurers balked at pay-
ing for the drug.)
Complicating the picture is Eli
Lilly’s announcement in January that
its drug donanemab slowed decline in
early symptomatic Alzheimer’s pa-
tients by 32%.
The implications for aducanumab
are unclear: Some analysts suggest
that Lilly’s apparent success could
ease pressure on the FDA, with the
possibility of another therapy backed
by better data just a few years down
the line. But the success of do-
nanemab, which works on the same
general principles as aducanumab,
could also help shore up doubts
around the science behind the Biogen
drug and weigh in favor of approval.
If the FDA does approve adu-
canumab, analysts predict Biogen
shares could soar to around $450. If it
is rejected, Jefferies analyst Michael
Yee expects the stock to drop to be-
tween $180 and $220.
Biogen shares, which trade at 13
times forward earnings, in line with
that of major competitors, haven’t
closed below $200 since 2013.
Even in a best-case scenario for
Biogen, uncertainties remain. The
megablockbuster sales estimates for
aducanumab don’t factor in the possi-
ble near-term arrival of Lilly’s alter-
native. How deeply that could cut
into Biogen’s sales depends on how
quickly Lilly could get its drug to
market.
In a statement, Biogen said it was
too early to talk about competition
between the drugs. “While we feel
that it is premature to speculate on
commercial uptake given that neither
aducanumab or donanemab are ap-
proved products, we welcome innova-
tion in Alzheimer’s disease where new
treatments are desperately needed,”
the company says.
The FDA’s delay gives investors
more time to decide how to play the
aducanumab conundrum. Precedent
suggests that Biogen will be disap-
pointed, and that the stock will dive.
But it’s hard to dismiss the signs that
something unexpected is in store.B
Blockbuster
In the Balance
Biogen’s
aducanumab
could rake in
$10 B
a year in sales,
or more, if it is
approved by the
FDA, Wall Street
analysts estimate.
Changing Fortunes
How Biogen's stock has reacted to developments on its Alzheimer's drug.
Biogen (BIIB / Nasdaq)
Source: FactSet$400350300250200Jan. 2019 2020 2021March 21, 2019
Two late-stage
aducanumab trials halted.Nov. 6, 2020
FDA advisory panel
rejects evidence for
aducanumab.Jan. 29, 2021
FDA delays decision
Oct. 22, 2019 until June.
Biogen says it will seek
FDA approval based on
new analysis of data
from the halted trials.