Biogen gains as analysts reflect positively on Leqembi's approval, pricing

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By Senad Karaahmetovic 

On Friday, the United States Food and Drug Administration (FDA) officially approved Leqembi, a new drug developed by Biogen (NASDAQ:BIIB) and Japan-based Eisai (TYO:4523) for the treatment of early Alzheimer's disease. The companies have, in the meantime, applied for full FDA approval.

Following the approval, the companies announced the treatment will be available at a price of $26,500 per year/per patient, which is in line with the analyst's expectations. According to Eisai, this price could be further reduced "to potentially half of this figure" during the maintenance phase.

Goldman Sachs analysts estimate that Biogen and Eisai could generate global peak sales of $15.7 billion in 2035 from Leqembi.

"With BIIB shares now trading at ~$280, we estimate there is roughly ~$90/share reflected in the stock for Alzheimer's disease (if we remove Leqembi, our DCF value is $190/share). This $90/share for Alzheimer's corresponds to ~$13bn in BIIB market cap or ~$7.5bn in peak WW Leqembi sales (based on a 3.5x multiple and the 50-50 profit split with Eisai)," the analysts said in a client note.

Here's what other Biogen analysts have to say about the approval and pricing for Leqembi.

Morgan Stanley analysts: "We view the price and label in-line with expectations and expect BIIB upon the news."

Mizuho analysts: "Anticoagulant language was a bit better than expected I'd argue, but that part of the label probably gets revised a tad with traditional approval, I believe. The debate is going to shift now to uptake of the drug and CMS reimbursement."

Bank of America analysts: "Overall, the announcement was in line with our expectations and a positive for BIIB shares… We believe lecanemab can potentially gain full approval as early as Aug/Sept this year following Eisai's submission of the full dataset later this quarter. We believe there will be an AdCom meeting prior to granting a full approval and there could be more questions regarding safety language."

UBS analysts: "We believe this is essentially a best case outcome for the approval/label, though pricing could draw some scrutiny (more below). From a stock perspective, this is an important de-risking milestone but the nebulous timeline to reimbursement remains, which will likely impede the stock move up for the time being. Eisai previously guided to the requirement of full approval for the NCD process. We are more optimistic and see potential for the process to begin in the coming months."

Biogen stock price is up almost 1% in pre-market Monday after closing 2.82% higher on Friday.