Biogen’s stock tumbles after the U.S. proposes restricting access to its Alzheimer’s disease drug

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Biogen Inc. of BIIB,
-9.47%
The stock sank 9.3% in premarket trading on Wednesday, the day regulators proposed limiting access to the class of Alzheimer’s disease drugs that includes the company’s therapy, EduHelm.

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The Centers for Medicare and Medicare Services on Wednesday released a Draft National Coverage Determination, proposing that patients taking these drugs would need to enroll in CMS-approved clinical trials to receive reimbursement for treatment.

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The company criticized the decision, saying it “needs to change this draft decision to combine it with reimbursement for other treatments for progressive diseases.”

If the decision goes ahead, it will likely reduce the sales potential of the drug, which has struggled to gain traction since it was first approved by the Food and Drug Administration in June.

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Raymond James analyst Danielle Brill wrote, “Basically, CMS is acting as the de facto FDA, and the BIIB needs to run another Phase 3 trial (but the CMS trial requires the BIIB to eat up the cost for the drug). will pay instead)” A note to investors.

“In the near term, we expect Eduhelm’s ramp to be very slow and disappointing and thus consensus numbers for 2022 and 2023 need to come at least as much,” said analysts at SVB Leerink.

Eli Lilly & Company Inc. Key LLY,
-4.32%
The stock was down 3.5% on Wednesday morning before the market opened; Its experimental Alzheimer’s drug, donenamab, is also included in this class of drugs.

A final coverage decision is expected in mid-April, following the public-comments period.

Biogen’s stock is up 0.7% this year, while the broader S&P 500 SPX,
+0.67%
down 1.1%.

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