Biogen stock jumped into a buy zone Thursday after Medicare officials said they would reimburse patients for the cost of Alzheimer's treatments that target an abnormal protein called beta amyloid.
The Centers for Medicare and Medicaid Services said it would pay for fully approved anti-amyloid drugs for patients with a formal diagnosis enrolled in a patient registry. The news puts Biogen and Eisai's Leqembi on track for full reimbursement. Leqembi is an amyloid-targeting Alzheimer's treatment that won accelerated approval in January.
Importantly, the CMS policy extends to all drugs in the anti-amyloid class. That also includes Eli Lilly's drug, donanemab, which is also being tested in Alzheimer's treatment.
"CMS previously hinted that full approval would open the door for reimbursement, so that decision would seem as anticipated," Wedbush analyst Laura Chico said in a note to clients. "We think there was more debate on the potential for a registry."
On today's stock market, Biogen stock surged 2% to 302.41. Eisai stock jumped 4.1% to 16.46. Meanwhile, Lilly shares advanced 1.6% to close at 436.49.
Biogen Stock: Patient Registry Is A Challenge
The registry requirement was a sticking point with the Alzheimer's Association. The association called the requirement "an unnecessary burden." Wedbush's Chico noted patients would have to find a physician willing to participate in a patient registry.
"Registries are important tools to gather much needed real-world evidence to transform and improve patient care," the Alzheimer's Association said in a written statement. "But registries should not be a requirement for coverage of an FDA-approved treatment."
Still, Biogen stock pushed back into a 5% chase zone above a buy point at 296 out of a double-bottom base, according to MarketSmith.com. The company's first Alzheimer's treatment, Aduhelm, also gained accelerated approval. But CMS said it wouldn't pay for Aduhelm unless patients were enrolled in Biogen's confirmatory study. That was such a barrier that Biogen unwound its Aduhelm efforts.
Chico kept her neutral rating and 263 price target on Biogen shares.
"Logistical rollout of the drug is another issue to contend with, and we do not anticipate a rapid launch uptake curve will manifest as the registries get sorted out," he said.
Biogen stock is highly rated with an IBD Digital Relative Strength Rating of 93. This puts shares in the top 7% of all stocks when it comes to 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
