FDA Approves Biogen's Aduhelm as Alzheimer's Treatment

On June 7, the U.S. Food and Drug Administration approved Biogen's BIIB Aduhelm (aducanumab) as a treatment for Alzheimer's disease under its accelerated approval pathway, determining that the benefits of treatment outweighed the risks. We've raised our fair value estimate for Biogen to $401 from $350 following this news, as we had incorporated only a 40% probability of approval into our model, and the drug's list price ($56,000 annually) is significantly higher than we had assumed. We now model more than $7 billion in Aduhelm global sales by 2030. Overall, the incorporation of Aduhelm into Biogen's neurology-focused portfolio provides additional support for our wide moat rating.

Alzheimer's is a serious disease with significant unmet need, and the FDA concluded that the drug's clear ability to reduce amyloid plaques in the brain across clinical studies (a surrogate endpoint) appears likely to reduce the pace of cognitive decline—a first for an approved Alzheimer's therapy. As we've previously discussed, Biogen submitted mixed Aduhelm data to the FDA. Both phase 3 trials were halted in March 2019 due to assumed futility, but in October 2019, new data showed evidence of slowed clinical decline in the Emerge trial (but no significant benefit in the Engage trial). In its press release, the FDA noted that the advisory committee review in November 2020, which resulted in 10 of 11 committee members voting that the Emerge study was not sufficient for approval, did not specifically discuss a potential accelerated approval, which carries a requirement to confirm the benefit of the drug in a postapproval (phase 4) trial. We had assumed that the FDA might require such a trial before approval, but the FDA appears to have had more comfort with using levels of amyloid plaque reduction as a surrogate endpoint than we had assumed.

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