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shares spiked nearly 60% after trading resumed early afternoon Monday, in the wake of the U.S. Food and Drug Administration’s sweeping approval of the company’s Alzheimer’s disease drug.
The pop in the stock was even more breath-taking than what analysts had predicted, but seems consistent with the FDA’s action, which took even
(ticker: BIIB) bulls by surprise.
The news ignited shares of other drugmakers. In afternoon trading on Monday, the American depositary receipts of Biogen’s partner
(ESALY) were up 53.7%, while shares of
(LLY), which is developing a similar Alzheimer’s treatment, were up 9.6%. The
iShares Nasdaq Biotechnology Exchange Traded Fund
(IBB), which tracks the biotech sector, was up 4.5%.
Shares of smaller companies working on Alzheimer’s treatments were up, too.
(PRTA) shares jumped 15.2%, while
(DNLI) shares were up 8.4%, and
(ATHA) was up 14.2%.
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The label on Biogen’s drug, aducanumab, is broad, meaning that its use is not restricted to certain categories of Alzheimer’s patients. Bernstein analyst Ronny Gal called the label “almost shockingly broad,” noting that it is approved for a population broader than that in which it was tested.
What’s more, the agency has also set a precedent for approving Alzheimer’s drugs based on their ability to clear beta amyloid plaques, which are thought to have a role in the disease.
“This is long-awaited good news for Biogen and for the Alzheimer’s space given the significant unmet need,” SVB Leerink analyst Marc Goodman wrote on Monday.
Citigroup analyst Mohit Bansal, in a separate note, wrote that the decision was surprising. “Unmet need wins over science as the FDA finds a way to approve the drug,” Bansal wrote. “The agency seems to have taken a stance to approve on biomarker of amyloid plaque reduction rather than the functional endpoint.”
The agency is requiring Biogen to run a confirmatory trial. But analysts played down the potential impact of the confirmatory study. Cantor Fitzgerald analyst Alethia Young wrote that she expects “significant use” of the drug, and that the confirmatory study “will take quite a while to play out.”
Piper Sandler analyst Christopher Raymond, who has argued against FDA approval of the drug, said that the agency had thrown “caution (and scientific rigor) to the wind.”
He said that the confirmatory study would not be completed for a long time. “How actively FDA will monitor BIIB’s fulfillment of that requirement remains to be seen, but investors well know that fulfilling these post-approval requirements can drag on for years,” he wrote.
Jefferies analyst Michael Yee, who had been more confident than most that the agency would approve the drug, said that investors would likely not be concerned about the required additional trial. The drug’s launch would now be the focus of investor debate, he noted. There are logistical issues, and substantial questions on pricing.
“We find it unlikely that payers will be extremely rigorous, given the high attention to the drug and widespread impact this has to so many families,” Yee wrote.
Biogen announced that the drug would cost $56,000 a year for a maintenance dose, though the cost during the first year would be lower. That is substantially above the price that the Institute for Clinical and Economic Review, an influential voice on drug pricing issues, said could be supported by aducanumab’s clinical benefit.
“If blended efficacy results are used from the Phase III trials, our base-case analyses suggest that an annual cost of $50,000 for aducanumab… would not be in alignment with its clinical benefits,” the group said in a May 5 interim report. It suggested prices between $2,560 and $8,290 a year.
Patient groups greeted the news with excitement.
“It is a new day,” said Harry Johns, president and CEO of the Alzheimer’s Association, which has advocated for the drug’s approval. “This approval allows people living with Alzheimer’s more time to live better.”
The drug, however, is no cure.
Dr. Samuel Gandy,
a professor at Mount Sinai and the director of Mount Sinai’s Center of Cognitive Health, said that clinicians would need to manage the expectations of patients and families. The drug is intended to slow the disease’s progression, not reverse it.
“If the drug works, the families may not be able to tell,” Gandy said.
Write to josh.nathan-kazis.@barrons.com
