Biogen stock whipsaws despite FDA granting full approval for Alzheimer’s drug; analysts explain why

The U.S. Food and Drug Administration (FDA) converted the approval status of Leqembi (lecanemab-irmb), a treatment for adult patients with Alzheimer’s Disease developed by Biogen (NASDAQ:) and Japan-based Eisai (TYO:), from accelerated approval to traditional approval.

Leqembi received approval in January through the Accelerated Approval pathway, which allows the FDA to approve drugs for serious conditions with unmet medical needs. As a post-marketing requirement, the FDA required a confirmatory study to validate the anticipated clinical benefit of Leqembi.

Teresa Buracchio, acting director of the Office of Neuroscience in the FDA’s Center for Drug Evaluation and Research, stated that this approval marks the first confirmation of a drug targeting the underlying disease process of Alzheimer’s disease demonstrating clinical benefit. The confirmatory study established the safety and efficacy of Leqembi as a treatment for patients with Alzheimer’s disease.

Biogen shares were halted for trading in Thursday after-hours trading before trading resumed at 07:10 ET (11:10 GMT), Friday. The stock initially opened higher before erasing gains to trade roughly flat at 07:49 ET.

While the approval is a clear positive, some analysts flagged that testing requirements and side effect warnings may limit its use.

“While the label is broadly unchanged from the accelerated approval, we note the addition of a boxed warning for amyloid-related imaging abnormalities (ARIA) which recommends testing for apolipoprotein E ε4 (ApoE4) status before starting treatment (given the higher risk of ARIA for homozygotes vs. heterozygotes and noncarriers). We view this label update as unsurprising given the discussion at the recent FDA AdCom meeting; recall that ApoE4 homozygotes represent ~15% of early AD patients,” Goldman Sachs analysts said in a client note.

TD Cowen analysts agree that the changes are unlikely to impact Leqembi’s potential.

“The full approval and the broadening of reimbursement is a major milestone for Leqembi, which will allow Leqembi’s launch to begin in earnest during H2:23,” they said.

Additional reporting by Senad Karaahmetovic