A single drug has defined Biogen, one of the world's largest biotechnology companies, for the past year and a half.
Known as aducanumab, the drug is far from ordinary. It stands a chance of being the first treatment approved to alter the course of Alzheimer's, a disease that impacts millions of lives and is estimated to cost healthcare systems hundreds of billions of dollars each year. The Food and Drug Administration should decide whether to clear aducanumab for market by June 7, and if it votes yes, investors expect a sales windfall for Biogen.
Having worked closely with the FDA before submitting a marketing application, Biogen remains confident that its drug will gain approval in spite of controversial results from clinical testing and a decidedly negative review by a panel of FDA advisers. On Wednesday, company executives doubled down on this optimism by sharing what they envision for aducanumab's launch.
They plan on spending about $600 million to support the launch, of which roughly $200 million would be reimbursable by Biogen's development partner, Eisai. They also aim to initially target several hundred of the "most important" Alzheimer's treatment centers that serve a high volume of patients.
As for price, CEO Michel Vounatsos didn't go into specifics. But he did explain that, after engaging with many stakeholders, the two most important factors in Biogen's view are the value the drug might have on patients' daily lives, and how much money it could save healthcare systems.
"Concerning price, we are getting there," Vounatsos said on a call with investors.
Altogether, Biogen believes aducanumab will generate "only modest revenue" this year if approved, though it's anticipated that sales would subsequently ramp up. The company included this modest contribution in its new guidance for the year, which forecasts revenue of $10.5 billion to $10.8 billion for 2021.
Yet even the high end of that range would hand Biogen it's second straight year of declining sales. It finished 2020 with $13.4 billion in annual revenue, a 6% decrease from 2019. Notably, last year was the first time in two decades that the company's annual revenue didn't grow.
The weaker earnings reflect a series of challenges facing Biogen's core business. Tecfidera, a multiple sclerosis pill that until recently accounted for almost 40% of Biogen's revenue, has lost market share since generic competition entered last year. Tecfidera revenue totaled $608 million in the fourth quarter, down almost 50% from the same period in 2019.
Meanwhile, Biogen's biggest growth product, Spinraza, now competes with two rival treatments sold, respectively, by Novartis and Roche.
Global Spinraza revenue in the fourth quarter fell 8% to $498 million. This effect was particularly acute in the United States, where Spinraza revenue was down 34%. Biogen claims most of the Spinraza headwinds were due to the COVID-19 pandemic, which has had an outsized impact in the U.S.
"Patients are scared to go to the centers, so they delayed the dosing. Some sites are being closed or limited capacity or staffing in order to dose the patients," Vounatsos said. "And last but not least, COVID is accelerating some switches to alternative treatment that exists. We've seen the peak of switch in September, and then we've seen a decline."
These issues have put pressure on Biogen to add new, lucrative drugs to its portfolio. To that end, the company recently inked a potentially $3 billion deal to access a pair of experimental medicines from Sage Therapeutics. Biogen hopes these drugs will provide it a stronger foundation in mood disorders and certain other conditions like essential tremor.
But beyond those additions, analysts haven't been excited by much of Biogen's pipeline, which mostly consists of neuroscience drugs with a significant risk of failing.
Indeed, during its third quarter earnings report last year, Biogen revealed it had stopped work on two experimental medicines: one for multiple sclerosis, the other for spinal muscular atrophy. And in Wednesday's report, the company said a different program targeting Parkinson's disease has been discontinued.
Such failures have only intensified the focus on aducanumab. But with its odds of approval still in doubt, investors are concerned Biogen's pushing forward without much of a safety net.
"Taking aducanumab out of the picture, how do revenue and earnings grow in 2022 and beyond?" Evan Seigerman, an analyst at Credit Suisse, asked on the investor call. "I'm really trying to understand if your outlook and your comments are mainly predicated on aducanumab, or if are other significant drivers that we should be thinking about and referencing."
Executives responded to such questions by saying Biogen is in the midst of a reset, both financially and scientifically. Chief Financial Officer Michael McDonald pointed out the company has 33 clinical drug programs, including 10 in late-stage testing. And of those 10, four are slated to produce data this year.
"Obviously, aducanumab is a catalyst, but we've also got a lot of other very interesting opportunities."
Investors don't appear sold on that claim, however. Biogen shares were down 4% midday Wednesday.