Biogen stock skidded Friday after the Food and Drug Administration fully approved its Alzheimer's treatment, Leqembi.
Leqembi already had accelerated approval. But with the traditional approval, Medicare officials said the agency would reimburse patients for the cost of the Alzheimer's treatment. Doctors will have to submit patient data before treatment and every six months to a registry database.
Analysts don't expect the registry requirement to slow Leqembi use. But they were split on how fast Biogen and partner Eisai could ramp the drug. During a CNBC segment, Eisai U.S. Chief Executive Ivan Cheung said "many health systems are quite ready."
The approval also includes a black box warning for a heightened risk of brain swelling in patients with a specific genetic abnormality and those on blood thinners. The FDA suggested patients receive genetic testing prior to treatment.
On today's stock market, Biogen stock dropped 3.5% to close at 275.07. Eisai stock fell 1.7% to 16.80.
Biogen Stock: Medicare Coverage Is Key
Leqembi has been on the market since its accelerated approval in January. But without Centers for Medicare and Medicaid Services coverage, its use has been limited.
On Thursday, CMS said it would reimburse the cost of Leqembi for patients with early Alzheimer's disease with abnormal amyloid plaques in their brains. The Alzheimer's Association applauded the Medicare move. Leqembi costs $26,500 annually without insurance.
"For people not enrolled in Medicare, including many treatment-eligible individuals under age 65, we expect other payers to ensure burden-free access," said Joanne Pike, chief executive of the Alzheimer's Association, in a written statement.
But Wedbush analyst Laura Chico says it will be some time before Biogen can really ramp the drug. She kept her neutral rating on Biogen stock.
"This marks an important transition period for Biogen as many of its flagship products face increasing competition, and new Chief Executive Chris Viehbacher attempts to change both the cost structure and risk profile of the product portfolio," she said in a note to clients.
Piper Sandler analyst Christopher Raymond, on the other hand, expects "robust uptake — starting now." He expects U.S. Leqembi sales of $55 million, $465 million and $995 million in 2023, 2024 and 2025, respectively. Though he notes the black box warning is a bit a curveball.
"These precautions are nothing new, so our first impressions are that this warning language is not likely to impact prescribing," he said in a note. "As for CMS, right on queue, broader coverage has been provided, with registry requirements that we see as not overly onerous."
'Early Days' In Alzheimer's Treatment
Dr. Howard Fillit, chief scientific officer of the Alzheimer's Drug Discovery Foundation, says the approval is an important first step. Leqembi is the first treatment that modifies a hallmark of the disease. But there are other markers tied to Alzheimer's disease.
"Now, it is more important than ever to double down and widen our focus to developing the next generation of drugs based on the biology of aging that can lead to a combination therapy and precision medicine approach," he said in a written statement.
The foundation estimates more than three-quarters of experimental Alzheimer's treatments are exploring novel targets — including mis-folded proteins, inflammation, metabolic disturbances, vascular problems and other potential pathways.
"While we celebrate the FDA approval of Leqembi, we acknowledge that the journey toward effective treatments for Alzheimer's is still in its early days," Fillit said.
Following the approval, Biogen stock fell to its lowest point since April, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
