FDA Approves New Alzheimer’s Drug

by James DiGeorgia | 06/07/2021 3:43 PM
FDA Approves New Alzheimer’s Drug

This newly approved drug developed by Biogen Inc. (BIIB: NasdaqGS) has sent the drug maker’s share price up to $125 a share, 43% in a single day, but investors may be miss reading the drug’s profitability. They’re ignoring two factors that could send the share price back to the FDA pre-announcement level.

 

This newly approved drug developed by Biogen Inc. (BIIB: NasdaqGS) has sent the drug maker’s share price up to $125 a share, 43% in a single day, but investors may be miss reading the drug’s profitability. They’re ignoring two factors that could send the share price back to the FDA pre-announcement level.

Shares of Biogen Inc. (BIIB: NasdaqGS) have soared over 48% on Friday and then approved on Monday by the Food and Drug Administration (FDA) for its new drug treatment for Alzheimer’s disease. The approval is being painted as fresh hope to millions, but the euphoric rise in the company’s share price may be temporary once the drug is in the marketplace for a few quarters.

While this is the first new drug therapy in almost two decades for Alzheimer’s disease, it’s also true that the medication Aduhelm (aducanumab) has been panned by many experts who are not convinced by the company’s less than conclusive clinical trials.

The fact is that patients who have had Alzheimer’s over a few years who began taking aducanumab showed little or no improvement. Some improvement and delay in the onset of the devastating symptoms of Alzheimer’s were indicated by the study for those who have recently been diagnosed and have just started battling the crippling disease.

This means that BIIB isn’t going to be able to acquire coverage from Medicare or Medicaid, much less private insurance companies, to pay the billions of dollars the firm was hoping to generate for the vast majority of people who have Alzheimer’s. However, it should be able to get approval to treat those who can prove they are in the early stages of the nightmarish disease.

Yet most press reports about the fast-track FDA authorization are claiming this approval means Biogen can begin distributing Aduhelm (aducanumab) to patients diagnosed with the degenerative brain disease that ravages memory and other cognitive functions. Thus implying that the drug therapy is a universal fit for all those suffering from crippling degenerative brain disease, it will be a multi-billion dollar boost for its earnings. The drug won emergency fast track approval even though experts on the FDA’s independent advisory committee reject the drug voicing its skepticism, saying they still aren’t convinced it works and that it has potentially devastating side effects like brain swelling and stroke risks.

Because of these concerns and indications that Aduhelm may only help slow the brain-destroying disease, not reverse the mental decline, most Alzheimer’s patients will find if they want the medication, they’ll likely have to pay US$20,000 to the U.S. $35,000 a month for it out of their own pockets.

This is bolstered by Biogen and its drug development partner, Japan’s Eisai Co., who actually stopped two Phase 3 clinical trials in March 2019 because an independent data monitoring committee said the therapy wasn’t proving effective. Biogen’s decision to announce further assessment of data from one of the two terminated trials was more positive than expected but knew the drug could only win approval for those newly diagnosed with the disease and only because these are scant other treatment options.

The fast-track approval by the FDA includes a provision under which Biogen must conduct a new randomized, controlled clinical trial to confirm it works. The FDA stressed in its announcement today that…

 

“If the trial fails to verify clinical benefit, the FDA may initiate proceedings to withdraw approval of the drug”.

This will mean the vast amount of the estimated 6.2 million Americans living with Alzheimer’s disease will likely not get either private insurers or Medicare and Medicated to pay for the drug treatment.

While press reports consistently point out that the number of people who will be diagnosed “will explode over the next three decades, more than doubling by 2050,” the drug will have to prove itself effective for those diagnosed early with the disease to persuade insurers, Medicare and Medicaid to cover the cost of the drug –and that isn’t guaranteed at this point.

All of this means that BIIB’s stock rise over the last few days may be driven by nothing more than hype and short covering. That means the company’s shares could rise another $100, $200, or even $300 a share on the frenzy but could just as quickly come back down to the pre-FDA announcement price as reality sinks in. 

According to the FDA and Biogen’s explanation of the new drug…

“Aducanumab, given as an infusion every four weeks, has shown consistency in reducing the level of amyloid plaques in the brains of Alzheimer’s patients, but scientists are split over whether such a reduction actually means. Prior amyloid-reducing drugs have failed to prove they slow progression of the disease.”

Dr. Patrizia Cavazzoni, the FDA’s director of the Center for Drug Evaluation and Research, wrote on the agency’s website.

“The clinical trials for Aduhelm were the first to show that a reduction in these plaques—a hallmark finding in the brain of patients with Alzheimer’s—is expected to lead to a reduction in the clinical decline of this devastating form of dementia, The data included in the applicant’s submission were highly complex and left residual uncertainties regarding a clinical benefit.”

“At the end of the day, we followed our usual course of action when making regulatory decisions in situations where the data are not straightforward.”

“In determining that the application met the requirements for Accelerated Approval, the Agency concluded that the benefits of Aduhelm for patients with Alzheimer’s disease outweighed the risks of the therapy.”

 

                      FDA Gives Green Light to Biogen’s Alzheimer’s Drug

 

 

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