With Aduhelm sidelined, Wall Street turns to Biogen’s next Alzheimer’s drug

Biogen’s first attempt at selling an Alzheimer’s disease drug hasn’t worked out. With that drug, Aduhelm, now essentially written off, investors’ attention has turned to another potential treatment for the disease that some see as key to Biogen’s future.

The treatment, called lecanemab, targets the same toxic brain protein as Aduhelm, and was co-developed by Biogen and the Japanese pharmaceutical firm Eisai. The Food and Drug Administration is currently weighing whether to grant lecanemab accelerated approval, which would be based at least in part on its ability to reduce that “amyloid” protein. A verdict from the agency is expected by January.

Before then, however, Biogen is set to disclose results from the largest clinical trial of lecanemab to date. Titled “Clarity,” the trial enrolled just over 1,900 participants with early Alzheimer’s and is testing whether the drug is any better than a placebo at slowing their cognitive decline. A readout should come this fall.

While the current lecanemab application is based on data from a smaller study of about 850 patients, Biogen and Eisai note how the FDA has said that Clarity could provide the evidence needed to support a traditional approval. If the trial succeeds, the companies plan to ask for such an approval in the first quarter of next year.

To analysts, Clarity represents a “binary” event for Biogen, which has been reporting weaker revenue as its top-selling products face increased competition. Positive results could strengthen the case for approval, setting the company up for a second shot at marketing a potential blockbuster Alzheimer’s therapy. Negative results, meanwhile, would cast doubts that lecanemab, like so many amyloid-targeting drugs before it, doesn’t help to alter the course of the disease.

Some already have concerns. Paul Matteis, an analyst at the investment firm Stifel, wrote in a note to clients that his team views the Clarity trial as “risky,” estimating a 30% chance that it succeeds.

“Currently, our focus is on ensuring that we collect the data, close the study, have a very clear readout, and then we will be engaging of course with the FDA,” Priya Singhal, Biogen’s interim head of research and development, said on a call Wednesday as the company reported second quarter earnings.

Even if lecanemab gains approval, the drug may face the same challenges that Aduhelm did as Biogen tried to convince doctors to use it and insurers to pay for it. For instance, Medicare, which covers a majority of the patients eligible to receive Aduhelm, in April enacted a policy that strictly limits coverage of Aduhelm and other anti-amyloid drugs approved to treat Alzheimer’s.

As it’s written, Medicare’s policy “does significantly limit the market opportunity for antibodies with accelerated approval,” said Michael McDonnell, Biogen’s chief financial officer.

McDonnell added that, should lecanemab be cleared for market, the company  would “closely align with Eisai” to provide the resources needed to launch it successfully. “We’ll take learnings from Aduhelm as necessary and where we can,” he said, “and will resource it at each phase of its commercialization, very gradually.”

Pushback from payers is a main reason why Aduhelm sales have been far below what Biogen and Wall Street initially anticipated. Revenue from the drug totaled $100,000 in the second quarter and $2.9 million over the first six months of this year. Biogen, which, with help from Eisai, had earmarked $600 million to help support Aduhelm’s launch, disclosed in May plans to eliminate the commercial infrastructure around Aduhelm as part of a larger push to save money.

Among other cost-cutting measures, Biogen has trimmed its slate of research programs. A drug named BIIB104 was recently scrapped after a mid-stage study testing it in patients with schizophrenia-associated cognitive impairment produced negative results. The company also discontinued work on two programs targeting ALS and another targeting Alzheimer’s this year.

Also in May, Biogen announced it was looking for a successor to CEO Michel Vounatsos, who’s led the company since 2017. Analysts on Wednesday’s call asked how far the search has progressed, but Biogen didn’t offer up many details.

“From my discussion earlier this week with board members and our chairman, I hear that the search is progressing as planned,” Vounatsos said. “But at this stage there is nothing yet to be reported.”

Biogen reported just shy of $2.6 billion in revenue during the second quarter, a less than 1% decline from the nearly $2.8 billion it recorded during the same period last year. The company ended the quarter with $4.8 billion in cash, cash equivalents and marketable securities.

Biogen shares were trading around $211.50 late Wednesday morning, down about 4% from their price at Tuesday’s market close.

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