Biogen says one of its experimental drugs has a shot at becoming the first ever treatment for what many believe is the root cause of Alzheimer's disease. If approved, the drug could reshape both Alzheimer's care and Biogen itself, providing the biotech with what would likely be a multibillion-dollar product and a source of stability as it deals with challenges in other parts of its business.
After running two large clinical studies, Biogen claimed to have enough positive data to ask the Food and Drug Administration for approval. The company told investors it was on track to submit an approval application by early 2020. That was, however, until Wednesday — when executives said they had begun the submission process but don't expect to complete it until the third quarter.
The update proved jarring for investors, who tie a substantial amount of Biogen's value to this Alzheimer's drug, known as aducanumab. Company shares fell almost 12% by mid-morning, a decline made more noteworthy by the simultaneous release of a first quarter earnings report that showed Biogen's main products still grew despite the global coronavirus pandemic.
Executives offered up reasons for the delay on a call with investors. They said this application and the data going into it are particularly complex, and that they don't want to hastily submit only to have the FDA deem it incomplete.
"We have to keep in mind that this is an unprecedented dataset ... with more than 3,200 patients, multiple biomarkers and multiple endpoints," CEO Michel Vounatsos said.
Al Sandrock, Biogen's research head, noted too how multiple members of the Biogen team contracted the new coronavirus and had to overcome its resulting disease, COVID-19. In February, a Biogen leadership meeting ended up being one of the first coronavirus "superspreading" events in the United States, infecting around 100 people in Massachusetts alone, including at least two of Biogen's top executives.
"I can tell you it's hard to work when you have COVID," Sandrock said.
Sandrock added that, as the data analysis has continued, nothing new has come up that changes Biogen's interpretation of the study results. He said the company is still engaged with the FDA and has an upcoming meeting with the agency to discuss aducanumab's application before officially submitting it.
Wall Street analysts, however, weren't sold on Biogen's explanations. They pressed executives for more details, asking whether feedback from the FDA had changed since last year. Earlier discussions with the FDA, after all, appeared to give Biogen confidence that it could file for approval early this year.
"Your prior guidance was that you would have a filing in early 2020, and today you're talking about a [third quarter] filing, which seems like a significant delay to me," said Matthew Harrison, head of biotech industry research at Morgan Stanley.
"Yet your characterization seems like nothing has changed and all your expectations are in line," he added, "so it seems like there's a significant disconnect with the timeline versus your commentary, and I'm just hoping you can take a moment to explain to us what has happened."
Biogen, though, didn't provide much additional clarity.
"This is an unusual process, so it's even harder to predict timing," Sandrock said. "Overall, what we're saying is that the potential for approval — we're still on track with that."
Following the investor call, Stifel analyst Paul Matteis wrote in a note to clients that Biogen's explanations were "unsatisfactory" and his team "came away confused" about the application delay.
For Evercore ISI analyst Umer Raffat, one takeaway is that data issues are likely slowing aducanumab's approval timeline. He wrote that he spoke to Biogen after the call, and management said the application has required "more work that initially understood," in part because of dataset complexities.
Investors, along with the Alzheimer's research community, are divided over whether aducanumab works and over the clinical results that could support its approval.
Wednesday's earnings could have alleviated some of the concerns, but it appears there are now even more questions hovering over the closely watched drug.