Analyst Note| Karen Andersen, CFA |
The Centers for Medicare and Medicaid Services has issued a draft decision on Medicare coverage of Biogen's Alzheimer's disease drug Aduhelm, indicating that it plans to cover the drug only for patients enrolled in clinical trials (termed Coverage with Evidence Development) and only for patients with mild cognitive impairment (mirroring Biogen's clinical studies). While a decision won't be finalized until April, we expect this sets up severely restricted access to Aduhelm among Medicare patients, and most U.S. Alzheimer's patients are covered by the program. As a result, we are maintaining our estimates for Biogen's potential amyloid antibody sales but shifting our sales estimate largely from Aduhelm to the next generation phase 3 drug lecanemab, with a 50% probability weighting (but higher sales potential), which limits the impact on our fair value estimate for Biogen. Despite this setback, we are maintaining our $361 fair value estimate, and we continue to see Biogen's broad neurology portfolio and pipeline supporting a wide moat.