SAGE - Buy Biogen For Runups To Imminent Regulatory Decisions

2023-04-28 09:00:26 ET

Summary

• Advisory Committee meeting for Biogen's LEQEMBI is set for June 9.
• Prescription Drug User Fee Act action date is a month later on July 6.
• Another PDUFA date is August 5 for zuranolone in two indications.

Shares of Biogen ( BIIB ) have remained flat since my prior coverage, which was before the PDUFA action date for the Accelerated Approval of LEQEMBI, a monoclonal antibody directed against amyloid beta (A?) for the treatment of Alzheimer's disease ((AD)). All the points regarding the Clarity AD trial still hold, as data from this confirmatory Phase 3 clinical trial provides the basis for partner Eisai’s ( ESALY ) Supplemental Biologics License Application (sBLA) for approval under the traditional pathway, which will be decided on July 6. Before that, the FDA will convene a meeting of the Peripheral and Central Nervous System Drugs Advisory Committee on June 9. Investors need to review all the facts to be ready for those catalysts.

In the Clarity AD trial, the primary end point ((PEP)) was the change from baseline ((CFB)) in Clinical Dementia Rating–Sum of Boxes (CDR-SB) scores. After 18 months, CFB was 1.21 with LEQEMBI and 1.66 with placebo, a 27% improvement vs placebo (p<0.0001 , Figure 1). Details of this scale , trial design flaws, as well as disturbing safety findings, are provided in the previous article. But to reiterate, a clinician can’t distinguish between two patients who have a 0.45-point difference, which represents a different answer in just 1 of the 30 “boxes” from the CDR-SB. Also, a 19% difference in infusion reactions and 11% with the sometimes-fatal amyloid-related imaging abnormalities with edema or effusions (ARIA-E) could’ve unintentionally unblinded many LEQEMBI subjects. Finally, the FDA will do their own analysis from the raw data, which could significantly alter the PEP results after considering missing information from dropouts.

Figure 1 . Clarity AD Primary End Point

Other major developments:

• In the first quarter 2023, Biogen suffered an $18 million loss for their AD franchise, which includes ADUHELM product sales and 50% profit-sharing from the LEQEMBI collaboration, less cost of sales, royalties, and SG&A expense. Suffice it to say, Biogen needs full approval, but their troubles may not end with that.
• The Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure testified before Congress on Wednesday that Medicare will cover LEQEMBI if the drug receives full approval in July. However, she also said there would still be a requirement for federally approved “registries” that “in no way limits people from getting access to the drug,” despite no indication of any effort to set these up to be ready by PDUFA. In short, there could be delays. The U.S. Veterans’ Health Administration is one of the few providing coverage of LEQEMBI to those who meet certain criteria .
• On the same day as the earnings call, the FDA granted accelerated approval of QALSODY for the treatment of amyotrophic lateral sclerosis (ALS) in adults who have a mutation in the superoxide dismutase 1 ( SOD1 ) gene, based on reduction in the plasma neurofilament light chain biomarker. The med is launching next week. If priced competitively at $150k in annual costs, the orphan drug ( 330 in the U.S. with the ultra-rare form of ALS) could contribute as much as $50 million to revenues, but that will take time.

To conclude, investors, as well as regulatory bodies in Europe, China and Japan will be monitoring the LEQEMBI events. There could be a runup prior to Ad Comm, but it is recommended to sell right before briefing documents are released, as the FDA will likely highlight anything negative for the Committee to consider. Approval is around 50-50 and option chains are available for June 16 and July 21. Even if approval prospects seem low, if Eisai somehow snags it, potential of cornering a share of the AD market is too large to ignore. The VA alone had 18 million vets over the age of 65 in 2019. After July, check out coverage of the New Drug Application for zuranolone by partner Sage Therapeutics ( SAGE ), which is undergoing Priority Review for major depressive disorder and postpartum depression with a PDUFA date of August 5 and has slightly better odds of approval. Reading the previous article is a must, as there are 7 trials being evaluated in the U.S. Buying for the runup or straddling around $300 for Biogen or $45-50 for SAGE for the August 18 chain are both viable.

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