Biotech giant Biogen (BIIB 2.04%) has had its share of ups and downs in the past couple of years. Many of the headlines the company generated were related to the controversial approval of its Alzheimer's disease (AD) drug Aduhelm.
Biogen's stock has also been quite volatile during this period. Further, the issues related to Aduhelm aren't yet resolved, which may well be a problem for Biogen in the future. Should investors bother investing their hard-earned money in this company right now with all this going on?
What's going on with Aduhelm?
Aduhelm works by targeting the buildup of the amyloid protein in the brain, which is thought to cause AD. The medicine earned the green light from the U.S. Food and Drug Administration (FDA) in June 2021, despite a panel of experts convened by the agency strongly opposing its approval.
While that was good news for Biogen, there is a catch. Aduhelm will have to undergo a post-approval trial to confirm that it is, in fact, effective. If it fails to produce positive results in this trial, Aduhelm could be taken off the market.
There are more reasons to be worried about the future of Aduhelm. First, other companies are looking to develop AD therapies of their own. Eli Lilly is one of them. Last year, the pharma giant initiated a rolling submission to the FDA for its AD medicine candidate donanemab. Eli Lilly plans to run a phase 3 clinical trial pitting donanemab against Aduhelm.
In addition to competition from other drugmakers, Biogen is dealing with coverage headwinds for Aduhelm. Back in January, the U.S. Centers for Medicare & Medicaid Services (CMS) released a preliminary coverage plan under which Medicare would pick up the tab for Aduhelm for a restricted AD patient population, namely those with mild cognitive impairment who are enrolled in CMS-approved clinical trials.
The final decision came in earlier this month, and despite a lot of lobbying from various third parties to influence its decision, the CMS stuck to its guns. Aduhelm will only be covered for those patients participating in CMS-approved studies. The AD therapy was already having a challenging launch before this decision. Things don't look promising for Aduhelm.
Should you take a chance on Biogen?
Biogen is facing other issues. One of the company's best-selling drugs, multiple sclerosis medicine Tecfidera, is facing generic competition, and its sales are dropping. Revenue from the company's spinal muscular atrophy medicine Spinraza also declined last year due to increased competition on the market. Aduhelm was supposed to help Biogen deal with these issues, but it looks like the AD therapy won't be able to do that -- at least not to the degree Biogen had hoped.
What's next for the biotech giant? The company does have several pipeline candidates, including another potential AD medicine called lecanemab.
This potential therapy is currently undergoing a phase 3 study. Biogen and its partner on this project, Japan-based pharma company Esai, have already initiated a rolling submission to the FDA for lecanemab. The submission was based on the results of a phase 2b in which lecanemab "showed robust clearance of brain amyloid" and was able to slow the cognitive decline of patients with early AD. The FDA granted lecanemab the fast-track designation and the breakthrough designation.
Both designations aim to speed up the approval of drugs for which there is a dire need or would be an improvement over existing therapy options. Another promising program Biogen is working on is zuranolone, a potential treatment for major depressive disorder it is developing in collaboration with Sage Therapeutics. In February, the two entities released positive results from a phase 3 clinical trial for zuranolone, although not as positive as investors had hoped.
These programs provide a sliver of hope for Biogen, but there is still a long road ahead before they can earn regulatory approval. And, of course, these newer products can run into regulatory headwinds of their own. That's especially the case with lecanemab as the FDA will arguably be under intense scrutiny regarding AD treatments following the Aduhelm controversy.
So where does that leave Biogen? While the company could certainly turn things around, there is still a lot of uncertainty on the horizon. That's why I wouldn't initiate a position in this company today. There are better biotech stocks on the market to consider.