Biogen disappointed with Aduhelm launch, but eyeing long-term Alzheimer's market

Biogen Inc. is fighting an uphill battle to bring its approved Alzheimer's disease drug Aduhelm to the broader market and potential megablockbuster status in the face of slow uptake by doctors and insurers.

Aduhelm, developed with Japanese partner Eisai Co. Ltd., became the first treatment to gain the U.S. Food and Drug Administration's go-ahead to reduce clinical decline associated with Alzheimer's disease in June. However, the disparity between the efficacy demonstrated in two late-stage studies has complicated reimbursement decisions, and the company has embarked on an education campaign to bring physicians on board.

"We are obviously disappointed with the delayed uptake of Aduhelm in the U.S.," Biogen CEO Michel Vounatsos said on the company's third-quarter earnings call Oct. 20. "We have made steady progress on key metrics, but the healthcare system remains a major bottleneck — in particular, the lack of clarity on reimbursement has delayed patient access."

Consensus estimates indicate that Aduhelm carries with it the potential for $9 billion in peak annual sales, and Mizuho Securities analyst Salim Syed noted on the call that this would be based on sustained administration and usage of the drug. But hesitancy on the reimbursement side could cut those revenues if the treatment is used in a different, less frequent manner, Syed said.

Vounatsos remained confident in the drug's prospects, however, and ascribed the slow start to early-to-market jitters.

"We believe the long-term prospects are significant in terms of value creation," the CEO said. "It's a global play ... and we are not panicking because there is a delay in the U.S., because there is a process."

Third-quarter revenue from Aduhelm was only $300,000 as wholesalers drew down on inventory from $2 million of the drug purchased in the second quarter, executives said. The Aduhelm sales were a "large miss" from consensus estimates of $12 million for the quarter, Cantor Fitzgerald analyst Alethia Young said in an Oct. 20 note.

"The system is not ready — evidently, we can see that, but it's a long way to go," Vounatsos said.

The next step for Biogen in its Aduhelm journey is the U.S. Health and Human Services' decision on whether to include the treatment in nationwide Medicare reimbursement. The decision in April 2022 will have ramifications not just for Biogen, but for the pipeline of medicines designed to clear amyloid plaques from the brain, including prospective Alzheimer's drugs from the likes of Eli Lilly and Co. and Roche Holding AG.

"It's important to remember that the [HHS decision] is not only for Aduhelm; it's going to be for the entire class of monoclonal antibodies that target amyloid for the treatment of Alzheimer's disease," Biogen's senior vice president of U.S. therapeutic operations, Alisha Alaimo, said on the call. "We can't speculate on the outcome of the [HHS] analysis, but ... we do believe it will be a major milestone, and this will alleviate a lot of the confusion that we're seeing with physicians."

One of the areas of concern has been the list price of Aduhelm at $56,000 per year. But Alaimo said the cost has not been the primary driver for decisions not to treat patients.

In particular, the unmet need for a treatment for Alzheimer's disease has been Biogen's go-to argument for widespread adoption of Aduhelm.

"Without access, every day that passes we estimate that over 1,000 Americans move from mild to moderate Alzheimer's dementia, and therefore may no longer be appropriate for initiation of treatment with Aduhelm," Vounatsos said. "As many have observed, our current system so far falls short in diagnosing and intervening in the disease."

Pipeline woes

Biogen became even more dependent on the success of Aduhelm as one of its late-stage assets failed to perform in the clinic, analysts said. The drug, called tofersen, did not meet primary endpoints in a study reported Oct. 17 for a type of amyotrophic lateral sclerosis, a progressive neurodegenerative disease that affects nerve cells in the brain and spinal cord.

The complex and mixed readout for tofersen affirmed Aduhelm's position as Biogen's primary near-term value driver for shares, RBC Capital Markets analyst Brian Abrahams said in a note. Biogen executives did not update the other late-stage drugs in the company's pipeline on the earnings call.

With overall third-quarter revenue for the company of $2.78 billion, Biogen's multiple sclerosis franchise of Tecfidera and Tysabri performed better than expected, and Cantor Fitzgerald's Young said sales erosion from competition to Tecfidera was likely stabilizing.