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Biogen Inc.’s first-quarter earnings beat expectations, but investors may be paying more attention to the latest information the company is sharing about its plans for aducanumab, the experimental Alzheimer’s disease drug that has sent the stock on a wild ride.
Shares of Biogen
BIIB,
were down 4% in trading on Thursday.
The company told investors on Thursday it expects to get approval from the Food and Drug Administration for aducanumab, with a decision announced sometime before or on June 7.
“The stock may trade up somewhat today, but as we indicated in our 1Q21 preview, we would not expect much follow-through as [Biogen] is not an earnings story right now as investors are focused on adu, in our view,” SVB Leerink’s Marc Goodman wrote in a note to investors.
Now Biogen is walking the fine line between detailing marketing plans if an approval comes through while also keeping revenue expectations measured. In slides for its earnings presentation, the drugmaker said there are more than 600 medical sites that are “ready” to treat patients with the drug, and it’s “focused on ensuring an equitable launch.”
That said, if the treatment is approved, Biogen cautioned investors to expect “only modest revenue in 2021.”
This is backed up by RBC Capital Markets analysts, who noted that the consensus is $68 million in sales in 2021, making the still-investigational treatment’s contribution to the company’s top line minimal at best. “We continue to anticipate all eyes on adu,” they wrote in a Thursday wrap-up of Biogen’s earnings.
Aducanumab’s back story is a complicated one. Back in early 2019, Biogen said it was scrapping development of the drug due to disappointing clinical results in a late-stage trial. Then, seven months later, it shocked investors by announcing a new data set that demonstrated a clinical benefit.
Then, in November, a document written by FDA regulators cited the “substantial evidence” to back approval, only to be rebutted later that week when an FDA advisory committee, made up of independent medical experts, overwhelmingly voted that a study used to support the application does not “provide strong evidence that supports the effectiveness of aducanumab for the treatment of Alzheimer’s disease.”
Analysts were again skeptical of the FDA’s position, with Raymond James’ Steven Seedhouse writing in advance of the meeting that “we’re not sure how else to put it: FDA could approve a drug that may not work.”
But Biogen is blazing ahead with its plans for the experimental therapy. It has now submitted applications for aducanumab to regulators in Australia, Brazil, Canada and Switzerland, as well as previous applications in the European Union and Japan.
The company told investors that it anticipates spending $600 million in sales, general and administrative costs in 2021 on the the anticipated marketing rollout for aducanumab if it’s approved. SG&A costs for pharmaceutical companies include spending on marketing and advertising — and these costs tend to rise when drugmakers launch new products.
Of the $575 million in SG&A costs Biogen reported for the first quarter of 2021, $75 million was spent preparing for the aducanumab launch, excluding support from Eisai Co. Ltd.
4523,
which is jointly developing the therapy with Biogen. (Eisai is expected to reimburse Biogen for $200 million of the total expected $600 million in SG&A spend this year.)
Biogen’s stock is up 10.2% for the year, while the broader S&P 500
SPX,
has gained 10.1%.
