Biogen stock (BIIB) is booming amid as Wall Street speculates about a potential profit boom after a promising study detailed the company's new Alzheimer's drug in partnership with Japan’s Eisai.
"We think that lecanemab holds mega blockbuster potential, likely in the $6-8 billion range," Guggenheim analyst Yatin Suneja wrote in a note to clients on Wednesday.
The two pharma companies said their drug lecanemab reduced cognitive and functional decline by 27% relative to a placebo. The findings come over an 18 month stretch in a Phase 3 study of 1,800 patients with early-stage Alzheimers.
Shares of Biogen surged nearly 50% in pre-market trading Wednesday on the development. The company's ticker page was the most active on Yahoo Finance ahead of the opening bell.
“Today’s announcement gives patients and their families hope that lecanemab, if approved, can potentially slow the progression of Alzheimer’s disease, and provide a clinically meaningful impact on cognition and function,” Biogen CEO Michel Vounatsos said in a statement.
The FDA is currently reviewing whether to grant lecanemab conditional early approval.
An estimated 6.5 million people in the U.S. age 65 and older are currently living with Alzheimer's, underscoring the sales potential for Biogen domestically alone.
Guggenheim's Suneja thinks Biogen is primed to benefit from an approval of lecanemab, and the stock may have further room to run, though there is a caveat for investors: Biogen didn't create the drug alone.
"With robust function data, approval of lecanemab as the first approved treatment for AD has the potential to reach the >1M eligible patients," Suneja explained. "If the company can secure rapid CMS reimbursement upon potential approval (this is likely based on the NCD coverage with evidence development memo), we estimate peak sales could be in the $6-8 billion. One caveat to this program vs. Aduhelm is that Eisai owns the asset and will record revenues globally (Biogen gets 45% profit split). ... Biogen and Eisai will co-promote lecanemab and share profits equally, which limits the peak opportunity to Biogen. Despite this, we believe lecanemab is worth ~$100-125/share toward our net present value for Biogen."