Biogen (NASDAQ:BIIB) stock is trading over 6% higher in Monday’s pre-market session. The upside comes after the U.S. Food and Drug Administration’s advisory panel unanimously recommended the approval of Biogen’s new Alzheimer’s disease drug, Leqembi, developed in partnership with a Japanese pharmaceutical firm, Eisai.
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At a meeting held last Friday, the FDA’s Peripheral and Central Nervous System Drugs Advisory Committee found that the drug’s Phase 3 trial data confirms its efficacy for the treatment of early-stage Alzheimer’s disease.
The committee’s recommendation enhances the likelihood of securing conventional regulatory approval for the drug, which initially received accelerated approval from the FDA in January. Notably, the regulatory body is required to make the final decision by July 6.
Moreover, obtaining full approval is crucial for the drug to be eligible for coverage by Medicare. In a recent announcement, the Centers for Medicare and Medicaid Services (CMS) stated that they will provide reimbursement for Alzheimer’s disease treatments on the condition that physicians submit patients’ drug experience data.
Following the advisory panel’s decision, two Wall Street analysts reiterated a Buy rating on BIIB stock while two maintained a Hold.
Importance of Leqembi’s Approval for BIIB
The approval of Leqembi carries significant importance for Biogen, especially considering the previous commercial failure of the company’s Alzheimer’s drug, Aduhelm.
Aduhelm, a drug co-developed by Biogen and Eisai, received FDA approval in June 2021. The approval was granted despite the drug being initially rejected by the advisory committee due to concerns regarding the efficacy data. However, Aduhelm faced further challenges, and eventually, in 2022, the CMS limited the coverage of the drug to clinical trials.
It is important to note that the Alzheimer’s disease market presents significant potential, and Biogen sees Leqembi as a promising catalyst for its overall revenue growth. According to data from GlobalData, the Alzheimer’s disease market in eight major countries is projected to exceed $13.7 billion by 2030, indicating a compound annual growth rate of 20% over a 10-year period.
Remarkably, Biogen’s Leqembi is likely to have only one key competitor in the space, which is Eli Lilly’s (LLY) donanemab. LLY is expected to apply for FDA approval of the drug in the current quarter. Thus, the timely approval of Leqembi will help BIIB garner a large market share, which will help boost its sales and profits.
Is BIIB a Good Stock to Buy?
Overall, Wall Street is optimistic about Biogen stock, with a Strong Buy consensus rating based on 18 Buys and five Holds. The average BIIB price target of $338.95 suggests 9.7% upside potential from the current levels. Shares have gained nearly 13% year-to-date.
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