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Biogen (BIIB) Down on Medicare Draft Ruling for Alzheimer's Drugs

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Biogen BIIB stock was down 7.6% in after-hours trading on Tuesday after the Centers for Medicare & Medicaid Services (“CMS”) released a proposed National Coverage Determination (“NCD”) decision for the class of anti-amyloid antibodies like its new Alzheimer’s drug (“AD”) Aduhelm.

Per the NCD, Medicare proposes covering FDA-approved drugs like Aduhelm only for patients enrolled in qualifying clinical studies. CMS took the decision after analyzing “robust evidence,” which showed that though these Alzheimer’s disease treatments had promising potential, they could also cause harm to patients like headaches, dizziness, falls, as well as other potentially serious complications such as brain bleeds.

Despite being the first medicine to be approved for reducing the clinical decline in AD indication, the launch of Aduhelm, approved (on an accelerated basis) in June, has been slow due to limited patient access amid a lack of clarity on reimbursement.

The NCD decision is open for public comments for 30 days. The final decision is expected in April. If the draft decision is approved finally in April, it will restrict patient access to Aduhelm and hurt sales of the drug in 2022 as well. However, the final decision could vary from the draft ruling.

Biogen, in response to the proposed NCD decision, said that it will deprive nearly all Medicare beneficiaries from accessing Aduhelm and the draft ruling needs to be changed.

So far this year, Biogen’s shares have declined 9.4% compared with the industry’s decrease of 30.7% in the same time frame.

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In fact, the stock has declined almost 40% since the FDA approved Aduhelm on Jun 7.

Aduhelm’s FDA approval faced criticism about its mixed efficacy results, the FDA selection of the accelerated approval path, and the regulatory process in general. The FDA approved Aduhelm despite an FDA advisory committee voting against its approval in November 2020 due to mixed outcomes data from ENGAGE and EMERGE phase III studies. All these issues seem to have affected demand, patient access and reimbursement for Aduhelm, which has resulted in its slow launch. Many doctors have refrained from prescribing the treatment.

In the third quarter, Biogen recorded just $0.3 million in revenues from Aduhelm. Aduhelm was also launched with a huge price tag of $56,000 a year, which was widely condemned and was considered a significant cost burden on Medicare. In December 2021, Biogen lowered the wholesale acquisition cost of Aduhelm by approximately 50% effective Jan 1, 2022

Meanwhile, the approval of the drug in Europe is also uncertain now after the Committee for Medicinal Products for Human Use of the European Medicines Agency gave a negative opinion regarding Biogen’s marketing authorization application for aducanumab.

The CMS draft ruling will also affect Roche RHHBY and Eli Lilly LLY, which have developed their AD candidates that are expected to be launched in a couple of years.

Roche’s pipeline candidate for AD, gantenerumab, is an anti-amyloid beta antibody developed for subcutaneous administration.

In October 2021, Roche announced that gantenerumab was granted Breakthrough Therapy Designation by the FDA based on data that showed that the candidate significantly reduced brain amyloid plaque in the ongoing SCarlet RoAD and Marguerite RoAD open-label extension studies as well as other studies.

Lilly has developed donanemab, also an anti-amyloid beta antibody for AD.

Lilly has already initiated a rolling submission with the FDA, seeking approval for donanemab for early Alzheimer's disease under the accelerated approval pathway based on data from TRAILBLAZER-ALZ. Data from the study showed that treatment with donanemab induced rapid amyloid plaque reduction at 24 weeks in participants with early symptomatic AD.

Lilly expects the rolling submission to be completed by the end of first-quarter 2022.

A smaller company, Cassava Sciences’ SAVA simufilam is also in late-stage development for the treatment of AD. In November, Cassava Sciences initiated a second phase III study of simufilam for the treatment of patients with AD.

Cassava Sciences’ phase III studies on simufilam are being conducted under Special Protocol Assessments from the FDA.

Biogen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here


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