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Biogen Inc BIIB

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With CMS Draft Decision on Biogen's Aduhelm, Focus Is on Pipeline Drug Lecanemab; Maintain $361 FVE

Karen Andersen, CFA Sector Strategist

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. 

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Company Profile

Business Description

Biogen and Idec merged in 2003, combining forces to market Biogen's multiple sclerosis drug Avonex and Idec's cancer drug Rituxan. Today, Rituxan and next-generation antibody Gazyva are marketed via a collaboration with Roche. Biogen also markets novel MS drugs Plegridy, Tysabri, Tecfidera, and Vumerity. In Japan, Biogen's MS portfolio is co-promoted by Eisai. Hemophilia therapies Eloctate and Alprolix (partnered with SOBI) were spun off as part of Bioverativ in 2017. Biogen has several drug candidates in phase 3 trials in neurology and neurodegenerative diseases and has launched Spinraza with partner Ionis. Aduhelm was approved as the firm's first Alzheimer's disease therapy in June 2021.

Contact
225 Binney Street
Cambridge, MA, 02142
T +1 617 679-2000
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Slow Growth
Employees 9,100

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