Biogen Plunges After Alzheimer’s Blow, Analysts Downgrade

(Bloomberg) -- Biogen Inc. shares plunged on Monday and analysts braced for further declines after a U.S. Food and Drug Administration advisory panel harshly judged the efficacy of the company’s experimental Alzheimer’s disease therapy, dimming prospects it will be approved by the agency.

The stock fell 31%, the biggest intraday drop in over 10 years. Biogen’s market value plunged by about $19 billion from last week’s rally.

Wall Street firms didn’t mince words over the weekend about the panel’s findings, which was that data from a single clinical trial with positive results was insufficient to show the treatment worked. Raymond James called it a “disaster,” while Baird wrote that the panelists had “skewered the company.” An approval of the treatment, called aducanumab, is now “virtually impossible,” it added.

The panel’s conclusion triggered a whiplash for investors and analysts because it came just after a positive FDA report on aducanumab sparked a historic rally, with shares surging 44% to $355.63 on Nov. 4. The stock never got a chance to trade during Friday’s session because it was halted ahead of the advisory panel’s contradictory findings. Several analysts suggested that if the FDA were to approve the treatment now, the agency would suffer a devastating blow to its reputation.

Already three analysts have slashed their ratings, including a BofA about-face where a downgrade comes on the heels of a Wednesday upgrade. “We now struggle how to envision a way the agency can salvage anything positive based on unequivocally negative adcomm,” Geoff Meacham said.

Jefferies predicted that Biogen shares would fall to a range of $220 to $250; they closed Nov. 5 at $328.90. This was “the most opposite of a panel vs FDA positive briefing book we’ve ever seen,” Michael Yee wrote in his analysis. Approving aducanumab could damage the agency’s scientific integrity and “raise more public skepticism around [the] FDA when there’s already scrutiny over vaccines.”

The FDA’s review process will continue until there is a decision in March. Stifel expects the stock to remain volatile until then.

“We will continue to work with the FDA as it completes its review of our application,” Michel Vounatsos, chief executive officer at Biogen, said in a statement Friday.

Here’s what analysts are saying about the panel’s findings:

BofA, Geoff Meacham

• Cut to underperform from neutral, PT to $240 from $360
• There are instances where regulators have approved medicines after a negative panel vote, “but we think the political fallout here would be significant—and engender major payer pushback and physician uncertainty.”
• Biogen will likely perform another clinical study; if the company had restarted a late-stage trial last year “significant clinical progress could have been already been made,” supporting a 2022 application

Cowen, Phil Nadeau

• Downgraded to market perform from outperform, PT to $215 from $275
• The discussion and votes were “a resounding and near unanimous rebuke of aducanumab,” as well as Biogen and the FDA’s clinical reviewers.
• While an approval is unlikely, “it is not impossible as the FDA clinical team clearly wanted aducanumab to be on the market” and the agency is not required to follow the panel’s advice.

Raymond James, Steven Seedhouse

• Underperform
• The panel “was a disaster for aducanumab,” one that was “completely justified” as there is “no serious scientific argument in favor of anything other than a new prospective study”

Baird, Brian Skorney

• Underperform, PT $228
• The panelists “skewered the company,” and the prospect of approving aducanumab “in the face of such an overwhelmingly negative vote and commentary” is “virtually impossible”; doing so “would destroy the agency’s reputation”
• “It is abundantly clear that whatever relationship FDA Director Dr. Billy Dunn has with aducanumab, his objectivity is completely lost”

Jefferies, Michael Yee

• Buy, PT $450
• This was “the most opposite of a panel vs FDA positive briefing book we’ve ever seen”
• The stock will get “hit hard” and could fall to a range of $220 to $250; “the ‘trade’ is to buy the huge dip coming and it probably slowly goes back up”
• Approving the drug in the wake of the panel “could raise more public skepticism around [the] FDA when there’s already scrutiny over vaccines,” and it is “unclear what that would mean” for the scientific integrity of the FDA

Stifel, Paul Matteis

• Hold, PT $258
• The panel “completely confounds things,” and the “overwhelming dissent” puts the FDA in a tough position
• If the drug is approved, “there may be considerable backlash that politics are driving the agency’s decisionmaking”
• The FDA may take its time acting on the application, and the stock is likely to be volatile until the PDUFA action date in March

RBC Capital Markets, Brian Abrahams

• Sector perform, PT to $244 from $263
• The stock is likely to “overshoot to downside” in the wake of the panel, as a key driver of potential near-term value “is likely gone” and as “risks to existing products, rest of pipeline, and BD urgency, become more exposed”

Bloomberg Intelligence, Marc Engelsgjerd

• The panel “makes it unlikely the drug will be commercially successful,” because if the FDA approves aducanumab “after this clear vote of no confidence, it stands to lose significant credibility”
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