Biogen’s Aduhelm – A Disaster Or Truly Audacious Planning?

Biogen (NASDAQ: BIIB) stock has not had a good time of it following the FDA approval of the Alzheimer’s drug Aduhelm. Well, there was that soar to $400 and change per Biogen stock back when the approval first came through but it’s all been downhill since then to the current $200 and a shade.

So, why is RBC evaluating Biogen as an outperform at this stage? One possible answer is that simply at $200 it is going to outperform. There aren’t all that many treatments for Alzheimer’s of any kind, here is one that can be marketed – Aduhelm – and there are perhaps 6 million patients a year inside the US alone. So, maybe Biogen isn’t worth that $40-0 but is worth more than the current $200, that’s a story that works.

It’s possible to have a bit of a downer on Biogen though. For one view of actions since that approval is that there’s a certain confusion within the management’s actions. First there’s been a walk back on the actual claims made for the drug. The label statement used to read for treatment of Alzheimer’s. That’s been softened to for those with mild cognitive impairment, or mild dementia – with the addition that there’s no effectiveness data on earlier or later stages. We might think this limits the market for the drug.

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There’s also Aduhelm pricing. This was first set at $54,000 per patient per year which was really pretty steep. So much so that there was a certain amount of kickback on it. Given that absence of other effective treatments well, why not charge what the market will bear? Biogen then walked that back too and costs are now apparently halved from that level.

So, it’s possible to wonder a bit. Reducing the prescribing extent and also cutting the price?

But then it’s possible to wonder whether this wasn’t all part of a reasonable – even good – plan. For the clinical results, while they got past the FDA, aren’t in fact all that good. This isn’t a treatment that clears up Alzheimer’s after all. It might even be the best there is, or at least no worse than others, but it’s not a cure, far from it.

So, given that there always was going to be some controversy over prescribing, coming out of the gate with grand claims and a high, high, price might be that plan. Get all the shouting over with early on and then – having listened to significant concerns of course – walk back some of the applicability claims and also cut the price to where it was meant to be all along. That takes much of the sting out of the complaints – see, we listened! – and the actually desired market position and pricing is now protected.

RBC’s estimation is that Biogen is worth more than the current $200 and change level. Depending upon our view of the management actions concerning Aduhelm we may, or may not, agree.