Biogen’s pivotal moment: Will the FDA approve the experimental — and controversial — Alzheimer’s-disease drug aducanumab?

The still-investigational therapy is viewed as promising because it would be the first new Alzheimer’s treatment in more than two decades after a string of high-profile failures in the category. It is also considered controversial given the conflicting clinical data shared by the company over the years and the ensuing mixed perspectives of Wall Street analysts and physicians.

“As a scientist, it’s not my inclination to consult a crystal ball, especially for a decision as complex as this one,” Dr. Howard Fillit, chief science officer for the Alzheimer’s Drug Discovery Foundation, told MarketWatch via email. “While it’s the FDA’s role to make decisions based on science and with the best interests of patients in mind, it’s much harder when the science is ambiguous, as it is here with different outcomes from the two clinical trials.”

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There are a number of potential scenarios for aducanumab.

An approval with a wide label could ultimately mean billions of dollars in new sales for Biogen and its development partner, Tokyo-based Eisai Co. Ltd. 4523, -1.13%. It could be a reprieve from revenue pressure for Biogen, which is on the hunt for a new flagship product now that its blockbuster multiple-sclerosis drug Tecfidera has lost patent protection.

A more limited approval could yield a less dramatic result for the stock and limited sales potential. And a rejection would negatively impact shares of not only Biogen but potentially other biopharmaceutical companies with important new prospective discoveries in the pipeline.

“We model a 70% chance of approval but relatively modest peak sales — likely in younger and highly motivated patients for whom a 35% reduction in the rate of cognitive disability could extend their active lives,” BTIG analyst Tom Shrader told investors this week.

Either way, the decision will also raise questions for the millions of American families seeking out new treatment options for loved ones who have been diagnosed with the neurodegenerative disease. 

“If approved, aducanumab would be just the first weapon in a robust arsenal that tackles the various disease pathways,” Fillit said. “I am confident we will have additional treatment options in the coming years.”

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After several years of clinical ups and downs, investors have become somewhat wary in their expectations for aducanumab.

In early 2019, Biogen shared disappointing clinical results from two Phase 3 clinical trials for aducanumab and said it would scrap further development of the drug as a result. Then, later that year, the company surprised investors when it announced new data from the same studies that indicated better efficacy among a larger group of patients.

Around that time, Baird analyst Brian Skorney told investors that “there are so many reasons we think aducanumab is getting rejected [that] our word-count restrictions don’t allow us to put them all here.”

Aducanumab, though still investigational, has weighed heavily on Biogen’s stock for years.

The stock hit a three-year low of $216.71 on March 22, 2019, around the time the company said it would stop developing aducanumab, before rebounding with the news that the company had resurrected the drug. It closed out 2019 at $296.73. Shares closed at $267.15 on Tuesday.

An approval could send the stock price as high as $390, and a decision against approval could see it drop to as low as $200, according to Bernstein analysts, in a note this week to investors.

RBC Capital Markets’ Brian Abrahams has predicted the stock could move up or down by 30%. He suggested that an approval for Biogen would bode well for other large drug makers that aim to develop their own therapies rather than buy them in acquisitions of smaller, more nimble companies, and it could provide further hints to the thinking at the FDA, which remains leaderless more than four months into the Biden administration.

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If aducanumab is approved, there are still a number of commercial unknowns, including how it will be priced — one thing to remember is that the vast majority of people with Alzheimer’s are Medicare beneficiaries and not covered solely by commercial health insurers — and how willing providers will be to prescribe a new therapy to their patients. Further, a narrow label could also limit utilization of the drug.

“Biogen will probably price aducanumab high,” Bernstein’s Ronny Gal wrote in a note on Tuesday. “The more we think about it, the more it seems sensible. Biogen has a long history of pricing drugs in the specialty range; Biogen is less likely to fear a backlash.”

The Institute for Clinical and Economic Review, a kind of drug-pricing watchdog, recently said that, due to the relatively “small overall health gains” demonstrated in the Phase 3 clinical trials, the drug should be priced no higher than $8,400 a year.

That said, commercial plans are already in motion. Biogen expects to spend $600 million on sales, general, and administrative costs in 2021 for aducanumab’s marketing rollout, and it has 600 medical facilities that are reportedly ready to treat patients.

Biogen executives in April told investors to expect “modest revenue” this year if the therapy is approved. (RBC estimates the drug could generate $68 million in revenue in 2021.)

Biogen’s stock has gained 10.8% so far this year, while the benchmark S&P 500 SPX, -0.04% is up 11.8%. The SPDR S&P Biotech Exchange-Traded Fund XBI, -0.52% is down 10.1% since January.