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Biogen Scores Surprise Win

Alzheimer's therapy shows promising results.

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 Biogen (BIIB) and partner Eisai announced that amyloid antibody BAN2401 has yielded positive data in a large Phase 2 study in Alzheimer’s disease. We’ve raised our Biogen fair value estimate to $404 per share as we add the drug back to our valuation model and assume a higher (60%) probability of approval for both of the companies’ amyloid antibody drug candidates, aducanumab and BAN2401. We continue to see Biogen’s steady neurology focus and increasingly diverse portfolio and pipeline as supporting a wide economic moat. 

We think this positive data supports the broader amyloid hypothesis, which has been severely tested by the failure of Eli Lilly’s (LLY) amyloid antibody solanezumab as well as oral BACE inhibitors from Johnson & Johnson (JNJ) (liver toxicity), Merck (MRK) (interim safety analysis), and Lilly/Astra (AZN) (lack of efficacy). BAN2401 targets amyloid beta protofibrils (oligomers and fibrillar amyloid), which are aggregates of amyloid beta that lead to the production of plaques. Biogen’s phase 3 Alzheimer’s disease drug aducanumab, which is expected to produce data by early 2020, has a similar mechanism of action to BAN2401, which we think bodes well for aducanumab’s efficacy. We’re still cautious on Biogen/Eisai’s Phase 3 BACE inhibitor elenbecestat, however, given the multiple failures in this class and the fact that elenbecestat’s recent positive Phase 2 data (in June) was based on only 38 patients at the highest 50-milligram dose. That said, elenbecestat had encouraging safety data, and the 50 mg dose showed statistically significant reductions in amyloid beta in the brain as well as a trend toward slower functional decline. Data from the Phase 3 studies of elenbecestat is expected in late 2020.

Karen Andersen does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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