Dominick Reuter/AFP via Getty Images
Analysts following
stock see little reason for concern over the request made by the acting commissioner of the U.S. Food and Drug Administration for an investigation into the agency’s approval of the company’s Alzheimer’s therapy.
The request was an acknowledgment of the widespread concerns raised by the nod the agency gave the drug in early June.
(ticker: BIIB) shares dropped 3% on Friday, but the view on Wall Street is that the investigation won’t have a long-term impact on the stock.
“We believe that no matter what the outcome of the investigation, we think it is unlikely to influence the uptake of the drug,” Truist analyst Robyn Karnauskas wrote in a note out Friday.
In a separate note, Jefferies analyst Michael Yee wrote that the request for an investigation “is another controversy to deal with,” but said he expects any investigation to determine that the FDA had the authority to give the approval it gave, “allowing markets to move on from this chapter.”
The controversy over the FDA’s approval of Biogen’s Alzheimer’s drug, known as Aduhelm, has generated a near-constant flow of headlines since the decision in early June. The FDA changed the indications for which Aduhelm was approved on Thursday, before asking the office of the inspector general of the Department of Health and Human Services on Friday to launch an investigation of the approval process.
In tweets describing the request, the acting commissioner of the FDA,
Dr. Janet Woodcock,
said that an “independent assessment is the best manner in which to determine whether any interactions that occurred between the manufacturer and the agency’s review staff were inconsistent with FDA’s policies and procedures.”
Earlier, headlines focused on the drug’s $56,000-per-year sticker price, and what it could mean for the Medicare system, which will likely shoulder much of the financial burden.
The flow of news has dampened investor enthusiasm for Biogen shares. The stock climbed 38.3%, to $395.85, on June 7, the day the FDA announced its approval of Aduhelm. Since then, it has fallen 9.5%, to $358.16, while the
has climbed 3.4%. The
(IBB) has climbed 3.1%.
Analysts say that the news flow will eventually ease. In her Friday note, Truist’s Karnauskas said that investors still need to get comfortable with insurer reimbursement for Aduhelm, patient uptake of the drug, and how big the market will be.
“We think that will take time, but see resolution into the end of the year,” Karnauskas wrote. She has a Buy rating and a $647 target price on Biogen, implying a gain of 80.6% from the stock’s close on Friday.
Yee, for his part, wrote that Biogen “is not a clean and easy story for most generalists,” but said that discussions with investors last week suggested the stock could rise if the view takes hold that the narrower label could ease conversations with insurers.
Yee wrote that the request for an investigation was a positive development. “We would not expect the OIG, or anyone else, to find any major issues, providing final affirmation that FDA had a scientific rationale on which to approve the drug,” he said.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
