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Biogen Slashes Prices of Aduhelm by 50%; Street Says Buy

Biogen Inc. (BIIB), announced that it is slashing its wholesale acquisition cost (WAC) of ADUHELM 100 mg/mL injection for intravenous use by 50% in the United States, effective January 1, 2022.

However, the news did not go well with the investors who sent the shares of the company, which focuses on neurological diseases, spiraling down 1.3% on December 20.

Making Aduhelm Affordable

The company’s rate cut comes with the intent of making the drug more affordable for millions of patients with early Alzheimer’s disease. According to the company, the reduced pricing will now cost $28,200 yearly for a patient weighing 74 kg at the maintenance dose of 10mg/kg.

As per the company’s statistics, with insurance coverage and easy access to facilities, approximately 50,000 patients may start treatment with Aduhelm in 2022.

Aduhelm has received accelerated approval from the U.S. Food and Drug Administration, which has proven beneficial in additional research and innovation as well as investment in Alzheimer’s disease.

Additionally, the company also stated its intent to introduce cost reduction measures in 2022 to sustain the reduced prices and R&D. The company expects these measures will generate cost benefits of up to $500 million annually, most of which will be realized in 2022.

Management Comments

Michel Vounatsos, CEO at Biogen, said, “Too many patients are not being offered the choice of ADUHELM due to financial considerations and are thus progressing beyond the point of benefitting from the first treatment to address an underlying pathology of Alzheimer’s disease. We recognize that this challenge must be addressed in a way that is perceived to be sustainable for the U.S. healthcare system.”

Vounatsos added, “It is a critical time for the Alzheimer’s disease community as the Centers for Medicare and Medicaid Services (CMS) is considering the possibility of coverage of not only ADUHELM but also this entirely new class of Alzheimer’s disease therapies. We hope our actions today will facilitate patient access to these innovative Alzheimer’s treatments.”

Analysts’ View

Following the news, Needham analyst Ami Fadia, said, “At first glance, a ~50% cut in the price of Aduhelm worldwide in our model with no change in our volume assumption would reduce our price target by $50. We are reviewing our model and will publish a revised one soon. Overall, we believe a lower price should favorably impact the upcoming CMS reimbursement decision in January and Aduhelm’s overall adoption.”

The analyst maintained his Buy rating and $386 price target on the stock, which implies 62.9% upside potential to current levels.

Overall, the stock has a Moderate Buy consensus rating based on 15 Buys and 10 Holds. The average Biogen price target of $342.41 implies 44.50% upside potential to current levels. Shares have lost 4.6% over the past year.

Hedge Fund Activity

According to TipRanks’ Hedge Fund Trading Activity tool, confidence in BIIB is currently Negative, as 16 hedge funds reduced their cumulative holdings of the stock by 52,900 shares in the last quarter.

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