We’re disappointed that we missed highlighting Biogen (BIIB) to our membership many moons ago.
Biogen’s stock has more than quadrupled since we launched coverage of the company in late 2011, and frankly, its stock has done nothing but rocket higher. To be fair, Biogen is a top-10 holding in the Health Care Select Sector SPDR (XLV), a position in the Best Ideas portfolio, so we do have some exposure to the blossoming biotech, but we could have done a better job pounding the table. The once- 9-rated on the Valuentum Buying Index, Health Care Select Sector SPDR has approximately doubled since it was added to the Best Ideas portfolio, but we know that may not be good enough.
The news keeps getting better for Biogen. The company announced March 20 that it observed positive interim results from early trials (Phase 1b) of its investigational Alzheimer’s disease treatment aducanumab (BIIB037) in patients with prodromal or mild Alzheimer’s disease, a progressive neurodegenerative disorder characterized by cognitive decline and behavioral disturbances. The analysis revealed a statistically significant reduction of amyloid plaque levels in the brain. Amyloid plaque is believed to be a key cause in the development of symptoms related to Alzheimer’s disease. Though we acknowledge that the results reflect early-stage trials, aducanumab clinical development will advance to Phase 3. The news was presented at the AD/PD Conference in Nice, France.
This is a big deal. According to the company, aducanumab is the first investigational drug for Alzheimer’s disease that has demonstrated a statistically significant reduction on amyloid plaque and a statistical significant slowing of clinical impairments in patients with prodromal or mild disease (Sandrock). The 3mg/kg and 10 mg/kg dose arms appear to be most efficacious as small dosage amounts (1 mg/kg) did not produce statistically significant results. The 6 mg/kg study remains ongoing. During the trial, the most frequently reported treatment-related serious adverse event and adverse event was ARIA (amyloid-related imaging abnormalities). Headaches occurred in 22% of patients receiving aducanumab. The safety and tolerability profile of aducanumab in the analysis was considered acceptable.
According to a study by the World Health Organization, released 2012, “current estimates indicate 35.6 million people worldwide are living with dementia. This number will double by 2030 and more than triple by 2050.” Alzheimer’s disease is the most common form of dementia and contributes to roughly two thirds of all cases, and thus, is expected to reveal proportional growth patterns to dementia itself.
As the first investigational statistically significant drug showing a reduction in amyloid plaque levels in the brain, Biogen’s aducanumab has a huge opportunity to improve millions of people’s lives. Other drug candidates that target amyloid plaque have not been successful. Eli Lilly’s (LLY) solanezumab and bapineuzumab, developed by Pfizer (PFE), Elan (PRGO), and J&J (JNJ) both failed to meet their endpoints during Phase III testing in 2012. Baxter’s (BAX) gammagard missed its Phase III endpoints in 2013. The odds for those drugs “making it,” however, never were better than 50%, according to some industry handicappers. Biogen’s aducanumab has the best shot yet, in our view.
Shares of Biogen surged nearly 10% on the announcement of the aducanumab study, and we expect a minor bump to our fair value estimate of the company on account of the new development. By some estimates, a successful treatment could generate as much as $10-$20 billion in incremental revenue. Enrollment for Phase 3 trials will be initiated later in 2015. We’re monitoring the situation closely.