Shares Biogen rose surprise News drugs - Actions Biogen raised surprise News drug for Alzheimer's. The effects could be lasting.

Biogen pulled a rabbit out of his hat on Tuesday morning, announcing that the Alzheimer's drug that investors had ruled out as a failure would provide an unexpected second chance at a Food and Drug Administration approval.

But while the drug may be a significant revenue generator for Biogen (ticker: BIIB), SVB analyst Leerink Geoffrey Porges said in an interview Tuesday afternoon that it would represent a significant loss to the health care system. a time when drug companies are already being criticized for high drug prices.

"There is no doubt that if approved, it will be a massive product," said Porges. "And for what purpose? The slope of the decline in cognition will be 20% slower. But no one says it is not going to decline, let alone that it is really going to get better."

Shares Biogen rose surprise News drugs

Biogen shares rose 26.1% on Tuesday, after jumping up to 37% in early trading.

Biogen Alzheimer's drug aducanumab failed in a so-called futility analysis in half of its Phase 3 trials in March, which led the company to discontinue studies. The company now says that the data that came after the futility analysis was completed makes them think the drug works, though the impact does not appear to be dramatic. Even so, it would be the only approved treatment for Alzheimer's disease.

"It's a relatively marginal effect," Porges said, citing the data Biogen provided in its statement Tuesday morning. "However, this drug will be introduced to a population of families and patients who are desperate and aligned with these monthly intravenous infusions; they will deny the medical infrastructure of this country with a demand for such infusions; they will flood the payment systems with the costs of such teas. "

Mr Porges said the drug could only cost the system $ 5 billion per year. "Is this the right incremental dollar for healthcare system spending," he said. "It's a question you can't help but ask, because the industry is being analyzed."

The route to this moment is very unusual. Biogen announced in March that it would suspend its study of aducanumab, which would cause its stock price to fall 29% in a single day, and apparently put the nail in the casket of what was once a leading theory of How Alzheimer's Disease Works

The company now says it is using data from those same studies to send the drug to the FDA for approval. In the earnings call Tuesday morning, company CEO Michel Vounatsos said that he met with the FDA Monday and that, according to that meeting, "we believe this data supports a regulatory filing."

An FDA spokesman said the agency does not comment on research drugs or drug applications, as the information is confidential under federal laws and regulations.

Mr Porges said it was "unprecedented" in his experience that a study fail a futility analysis, but that the company would base an FDA submission on the study anyway. He said it was also unusual for the company to meet with the FDA yesterday, and then make such a significant statement the next day.

"We can only assume that the company obtained very clear direction from the agency," he said. "You wonder how much this reflects the agency's urgency to get a treatment in the market for a catastrophic disease of the elderly who would otherwise have no treatment options."

Mr Porges said if the agency sent a clear signal in support of the request, it signaled a change in the agency's approach to drug approvals.

"Five or ten years ago, that simply would have laughed off the ring road," he said, referring to the effort to present a failed analysis of futility. "I think the agency has become so much more, I would say, patient-friendly and flexible in the industry."

Questions from analysts have been centered on the recent departure of Biogen's R&D chief Michael Ehlers announced on October 1. "Can these two things be related?"

"I think there are no accidental associations between events and management changes," Porges said. "It's hard to imagine how it has a particularly positive implication."

The first question about Rogen's Biogen earnings call was whether there was a connection between the two developments.

"Mike decided to leave the company on his own, and I cannot thank him enough for his many contributions," said Vounatsos de Biogen.

Ehlers did not respond to a request for comment on aducanumab news.

Porges, meanwhile, said approval is still far from secure. "This is the mother of all the criticism," he said. "Given the great control that this implies, I think they will be quite cautious in their review."

Mr Porges said if the agency sent a clear signal in support of the request, it signaled a change in the agency's approach to drug approvals.

Questions from analysts have been centered on the recent departure of Biogen's R&D chief Michael Ehlers announced on October 1. "Can these two things be related?"

"I think there are no accidental associations between events and management changes," Porges said. "It's hard to imagine how it has a particularly positive implication."

The first question about Rogen's Biogen earnings call was whether there was a connection between the two developments.

"Mike decided to leave the company on his own, and I cannot thank him enough for his many contributions," said Vounatsos de Biogen.

Ehlers did not respond to a request for comment on aducanumab news.

Mr Porges said that if the drug was approved, the stock could return to trading levels earlier this year, near $ 400. If not, return to where it was earlier this week. "If this is rejected by the FDA, then that's where it goes," he said.

"It all comes down to what you, as the analyst or the investor, think about how likely you are to get the FDA approval of the drug," he said of the recommended approach to the action.

Porges rated Biogen Market Perform with a $ 256 price target, The stock closed at $ 283.50 on Tuesday.