Biogen (BIIB 3.18%) recently got some good news in the U.S. An advisory committee for the Food and Drug Administration (FDA) unanimously confirmed the clinical benefit of its Alzheimer's drug, Leqembi. The FDA earlier granted Leqembi accelerated approval and now is considering it for traditional approval. The agency is set to make a decision on July 6.
But things may not be so bright in Europe. Alzheimer's disease experts there say Leqembi's clinical benefit may not outweigh the potential side effects and cost to the health system, according to Reuters. Biogen, facing declining revenue in older drugs, is counting on Leqembi to usher in a new era of growth. Could this potential problem in Europe signal trouble?
Risks and costs
First, some more details from the Reuters report. Nine neurologists and researchers in Europe who spoke to the wire service each said Leqembi, even if approved, may not be widely prescribed. The general view is the possible side effect of brain swelling along with the cost and logistics of treatment may discourage doctors from prescribing it for their patients.
The current list price for Leqembi in the U.S. is $26,500 annually. The treatment is administered by infusion so must be done at infusion centers. Infusions take about an hour and are done every two weeks. Some patients also may require monitoring for brain swelling through MRI scans.
In recent times, European healthcare spending per capita has climbed as GDP per capita has declined, according to the OECD. The increase in healthcare spending may not be sustainable. And that could limit patient access to certain expensive medical treatments -- such as Leqembi.
Now, let's consider market sizes. In the U.S., more than 6 million Americans are living with Alzheimer's disease. In the European Union, more than 7 million people suffer from dementia -- but some cases of dementia aren't due to Alzheimer's, so wouldn't be treated by Leqembi.
Right now, regulators in Europe and Japan still are reviewing the drug. If they approve it -- and it wins traditional approval in the U.S. -- Leqembi could bring in total sales of $12.9 billion by 2028, according to GlobalData.
If European uptake isn't strong, though, that could weigh on this figure. That said, the U.S. should generate the lion's share of Leqembi revenue. For example, out of nearly $5 billion in 2028 global sales, almost $3 billion should come from the U.S., GlobalData figures show.
A key market
Now, let's get back to our question: Does hesitance over Leqembi in Europe signal trouble for the drug's growth prospects -- and Biogen's? Not necessarily. Yes, solid uptake worldwide would be ideal. But the U.S. market remains key for the company and its Alzheimer's drug. If Leqembi is successful here, it could spur a new era of growth for Biogen.
The big biotech company truly needs this. Biogen's revenue has been on the decline due to older drugs losing exclusivity. Last year, it reported about $10 billion in revenue, down from more than $13 billion just a few years ago.
Biogen is counting on this new Alzheimer's drug, then other potential products like zuranolone for major depressive disorder, to boost revenue growth -- and offer it a new long-term story. Regulators plan to decide in August on whether to approve zuranolone.
So, how are things looking for Leqembi in the U.S. market? As mentioned above, the FDA advisory panel of experts supports the drug's potential approval. And Medicare loosened up its restrictions regarding coverage of drugs like Leqembi, which target beta amyloid buildup in the brain. Medicare said it would cover the products if they win traditional approval and if doctors collect and share data in registries about how the drugs are working on their patients.
There's reason to be optimistic -- but with a bit of caution. And it's important to remember that Biogen won't benefit immediately from Leqembi sales. It will be costly to launch the drug. So, investors will have to be patient regarding this possible new wave of growth. It still may be early to buy Biogen if you're a cautious investor. But Leqembi makes it a stock to put on your watch list.
