EC Biotechs Ready To Roar

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Last week, we outlined major events unfolding for biotechs that can have the potential to be catalysts for an industry breakout in the article Biotechs Remain Promising.

The biggest one was the FDA decision, which was announced earlier this week, to approve Biogen's (BIIB) drug aducanumab, a treatment for Alzheimer's disease. The decision will reverberate across the industry and the healthcare sector for many reasons. Most important for biotechs, the approval suggests the FDA's flexibility in approving a drug in an area of high unmet need when the drug shows improvements in biomarkers even while not immediately showing evidence of addressing serious disease symptoms.

Aducanumab, being marketed as ADUHELM, is a monoclonal antibody that targets the brain's amyloid proteins which break down and coalesce into clumps or clusters to form plaque. Clearing such protein clusters of amyloid plaque is what aducanumab does, and does it fairly well, as proven in the trials. The theory is that once the amyloid plaque has been washed away, the Alzheimer's disease symptoms of dementia will improve. That remains a theory as both the Phase 3 trials for aducanumab failed to prove an improvement and couldn't even beat the placebo. All prior drug trials using the amyloid theory have failed in showing an improvement in symptoms. Now it's hoped that the theory is eventually proven true, but it will take many years to definitively determine that and if at all.

Biogen Hits A Jackpot

What was akin to a jackpot combo of winning both the Powerball and Mega Millions at the same time was for Biogen to receive approval to a controversial drug and then a completely clean label as well for ADUHELM. There are no limiting qualifications on the patient stage for the drug, and the label says the drug is for the "treatment of Alzheimer’s disease." The FDA explained it by stating that since amyloid is a clear sign of the disease, the drug can also possibly benefit later-stage patients, even though the failed trials had only early-stage patients.

A controversial drug approval with a clean label is the best of both worlds for Biogen, which has already set a price of $56,000, well above analyst expectations. Last month, the Institute for Clinical and Economic Review (ICER), the drug pricing watchdog, had recommended a price range of $2,500 to $8,300 for ADUHELM due to the drug's unproven benefit. A fourth trial has been asked for by the FDA, and the agency has given Biogen up to nine years to conduct it. There is already some conflict being reported on FDA's envisioned timeline compared to Biogen's level of urgency for the fourth trial. In many respects, it doesn't matter what the outcome of the fourth trial will be. It will be harder to do such a trial as patient groups shift to the drug, and even if the trial fails, the drug is on its way to becoming a blockbuster this year and chalking up billions each year, quite likely becoming the most profitable product in the history of the industry.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Ayelet Wolf 1 month ago Member's comment

Fascinating, thank you.