Morgan Stanley analyst Matthew Harrison named Biogen (BIIB) a catalyst driven idea, while keeping an Overweight rating and a price target of $363 on the shares, with CMS set to release its draft coverage decision on monoclonal antibodies targeting amyloid for the treatment of Alzheimer's disease by January 12. In a note to investors issued last night, the analyst stated that his base case scenario is coverage with evidence development given the unmet need and historical precedents.
CATALYST DRIVEN IDEA: In a research note to investors, Morgan Stanley analyst Matthew Harrison named Biogen a catalyst driven idea, while keeping an Overweight rating and a price target of $363 on the shares. With the Centers for Medicare & Medicaid Services scheduled to release its draft coverage decision on monoclonal antibodies targeting amyloid for the treatment of Alzheimer's disease by January 12, the analyst stated that his base case scenario is coverage with evidence development given the unmet need and historical precedents. Harrison added that his scenarios suggest a positive outcome could occur in about 90% of the outcomes, anticipating the stock to trade 10%-15% higher.
The analyst also noted that following a proposed decision memo, there will be a second 30-day public comment period. A final decision is expected by April 12. While the proposed decision is subject to modification, the initial read of the draft memo will set the tone of the likely coverage decision and is a key focus among investors, he added. The NCD, or National Coverage Determination, decision applies to manufacturers' antibodies targeting amyloid and is not specific to Biogen's Aduhelm. A favorable coverage decision is needed to inflect Aduhelm U.S. sales in the second half of 2022, Harrison argued, with sales of the drug being limited since launch given the controversy around approval and a lack of clear reimbursement coverage.
Meanwhile, Needham analyst Ami Fadia lowered the firm's price target on Biogen to $328 from $386 to reflect the roll forward in the firm's discounted cash flow valuation model, but kept a Buy rating on the shares. Based on the commentary at the JPMorgan Healthcare Conference, Fadia is positive on Biogen's longer term growth potential based on its late-stage assets in Alzheimer's, depression launching in early-mid 2020s, and pipeline in lupus, stroke, genetic neurodevelopment, and Parkinson's that could drive growth in mid-late 2020s.
ADUHELM PRICE CUT: Biogen has recently announced that, effective January 1, 2022, it was reducing the wholesale acquisition cost of its Alzheimer's treatment Aduhelm for intravenous use in the United States by approximately 50%. For a patient of average weight, the yearly cost at the maintenance dose will be $28,200. "Over the past several months, we have listened to the feedback of our stakeholders, and we are now taking important actions to improve patient access to Aduhelm," said Michel Vounatsos, CEO at Biogen. "Too many patients are not being offered the choice of Aduhelm due to financial considerations and are thus progressing beyond the point of benefiting from the first treatment to address an underlying pathology of Alzheimer's disease. We recognize that this challenge must be addressed in a way that is perceived to be sustainable for the U.S. healthcare system." Biogen believes with insurance coverage, and access to diagnostics and specialized centers, approximately 50,000 patients may initiate treatment with Aduhelm in 2022.
Meanwhile, the Department of Health and Human Services Secretary Xavier Becerra said in a statement yesterday that he was instructing the Centers for Medicare and Medicaid Services to reassess the recommendation for the 2022 Medicare Part B premium, "given the dramatic price change of the Alzheimer's drug, Aduhelm. With the 50% price drop of Aduhelm on January 1, there is a compelling basis for CMS to reexamine the previous recommendation."
Following the company's price cut news, Wedbush analyst Laura Chico had previously lowered the firm's price target on Biogen to $249 from $261, while keeping a Neutral rating on the shares. The analyst said the move was "clearly necessary but also indicative of a launch gone awry to date." Chico also noted that cost/access represents one major barrier to Aduhelm uptake thus far. However, price cuts in other drug classes like the PCSK9 antibodies did little to accelerate adoption, she added. For Aduhelm, absent additional, controlled data, the analyst sees debate persisting around the drug's utility. Moreover, with Eli Lilly (LLY) set to complete its donanemab BLA submission in the first quarter of 2022, Biogen's first-mover advantage is unlikely to persist for long.
Keeping a Buy rating on Biogen's shares, Stifel analyst Paul Matteis said back on December 20 that he was a "big fan" of the company's decision to cut the price of Aduhelm, and argued that this made some level of reasonable Medicare reimbursement more likely.
ACQUISITION TALKS: Shares of Biogen were also in the spotlight back in late December following a report by Korea Economic Daily's Jae-young Han, Ju-hyun Lee, In-seol Jeong and Hyung-suk Song saying Samsung Biologics was in talks to buy the drugmaker. The biotechnology company reportedly approached Samsung to sell its shares, which could be valued at more than $42B, including a control premium, according to the report, citing a global investment bank senior official.
Samsung Biologics has since issued a regulatory filing indicating that speculation in Korea Economic Daily regarding Samsung's takeover interest is not true.
PRICE ACTION: In Tuesday morning, shares of Biogen have gained about 2% to $240.16.
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