Reply To: Traders Market Weekly: Rates, Banks and Herd Mentality


Biogen (BIIB) -9% is getting hit after the Centers for Medicare & Medicaid Services draft decision to cover monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease only under Coverage with Evidence Development (CED), which could require patients to be enrolled in CMS approved trials, or trials supported by the NIH in order to be covered. This would dramatically limit the commercial opportunity for Aduhelm.

A final decision is expected by April 12 and could change (a preliminary CED proposal regarding CAR-T therapy was broadened to FDA-approved indications in 2019, so a reversal is possible), but this initial decision by the CMS effectively reverses the controversial FDA approval by severely limiting coverage by Medicare. Needham cut Aduhelm’s probability for success to 20% from 75% to reflect this preliminary decision, cutting the value of the drug to $13/share from $48.

Needham defended the stock, cutting its target to $292 from $328, but the rest of the company’s prospects aren’t very favorable in my view. Another bull at Oppenheimer reiterated its $350 target, citing a $272/share floor valuation ex-$78 in Aduhelm value (this appears to be a bull that is somewhat out of touch). The ~11x EV/EBITDA multiple seems fair. I had a felling that the takeover rumor pop late last year was a good time to dump shares and I should have listened to my gut.