Medicare officially restricted use of Biogen's Alzheimer's treatment, Aduhelm, to patients enrolled in clinical studies, but Biogen stock closed in the green.
The decision from the Centers for Medicare and Medicaid Services reaffirms an earlier ruling for the controversial drug. Aduhelm's U.S. approval is already contingent upon additional testing. Now, only Medicare patients enrolled in studies will receive reimbursement for treatment and related tests.
"One last glimmer of hope for Aduhelm — snuffed out," Piper Sandler analyst Christopher Raymond said in a report to clients.
On the stock market today, Biogen stock rose 1.5% to 214.75.
Biogen Stock: Aduhelm Hasn't Proved Itself
Aduhelm won Food and Drug Administration approval for its ability to remove abnormal plaque in the brain called beta amyloid. The approval was accelerated. Biogen has nearly a decade to prove the mechanism leads to a benefit on cognition.
So far, Aduhelm uptake has been slow. The Medicare decision opens up coverage for patients in any randomized controlled study, rather than just those held in hospital-based outpatient centers. Still, that likely limits Aduhelm use to just thousands of patients, Needham analyst Ami Fadia said in a note.
She kept her buy rating on Biogen stock, but trimmed her price target to 262 from 290.
The silver lining is the CMS decision doesn't apply to all drugs in the same class. Drugs that show a benefit through the standard FDA approval process could receive broader CMS coverage. That group includes another drug from Biogen. Eli Lilly and Roche have similar drugs in testing.
But Biogen said the Medicare decision could have an overreaching impact on the class of drugs.
"This unprecedented CMS decision effectively denies all Medicare beneficiaries access to Aduhelm, the first and only FDA-approved therapy in a new class of Alzheimer's drugs," a Biogen spokesperson said in an email. "These coverage restrictions, including the distinction between accelerated approval and traditional approval, have never been applied to FDA-approved medicines for other disease areas."
The company noted its partner, Japan's Eisai, is also requesting an accelerated approval for another anti-amyloid drug known as lecanemab.
Cost-Saving Plan Underway
Biogen is working through a plan to save $500 million annually. Now, Biogen stock analysts wonder if further Aduhelm development will be on the chopping block.
RBC Capital analyst Brian Abrahams said Biogen may wait for lecanemab data in the third quarter before making a decision to invest in its Alzheimer's drug sales network.
"We believe that today's decision likely spells the end for Aduhelm, as with no clear path for reimbursement access for more patients, Biogen may consider scrapping commercialization — and potentially their Phase 4 trial — as part of cost-saving measures," he said in a report.
Abrahams maintained his outperform rating and 244 price target on Biogen stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
