Biogen’s poster presentation for Alzheimer’s candidate hardly noticed at London AAIC meeting as market focuses on quarterly results instead; start accumulating.

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Biogen Inc. (Cambridge MA) laid out long-term plans to strengthen its core multiple sclerosis (MS) business, develop more neuroscience drugs and shop for late-stage assets, after reporting robust second-quarter results, according to Reuters.

Strong sales for its spinal muscular atrophy (SMA) drug, Spinraza, also prompted the drugmaker to raise its 2017 profit and revenue forecasts.

Spinraza could become one of the company’s “largest commercial assets, shifting the center of gravity for Biogen beyond MS,” CEO Michel Vounatsos said after announcing the strong results.

The treatment generated an eye-popping $203 million in the quarter, compared with the consensus estimate of $70 million, assembled by Evercore ISI.

The company said it may have underestimated the number of patients with SMA, which could partly explain the surprisingly strong Spinraza demand. The injection costs a colossal $750,000 for the first year of its use but that price drops to $375,000 a year later.

Vounatsos said strong US growth for Spinraza would continue as more patients opt for the treatment and expected growth to slow once they shift to maintenance therapy. The majority of Biogen’s revenue, however, still comes from its portfolio of MS drugs.

Despite increasing competition, the company has maintained its global market share in the segment in the second-quarter. Sales of Tecfidera, Biogen’s leading MS drug, came in at $1.11 billion, just beating estimates.

Biogen said it expects the MS business to be the primary driver of future cash flow. The company said it is also planning to develop more neuroscience treatments, including for dementia and movement-related disorders, as the US population ages.

Biogen said it will also focus on developing rare disorder drugs and acquiring late-stage assets, Reuters notes. The company would explore deals of “all sizes,” and the largest transaction could be in the $10 billion to $12 billion range, Vounatsos said.

Excluding items, Biogen earned $5.04 per share, amply beating estimates of $4.41 per share.

The company raised its full-year adjusted profit forecast to a range of $20.80 to $21.40 per share, and revenue between $11.5 billion to $11.8 billion. It had forecast earnings of $20.45 to $21.25 per share and revenue of $11.1 billion to $11.4 billion in January.

Since the earnings results were announced, shares of the company are up 2% at $291.61, Tuesday, August 1.

Steve’s Take:

Okay, yes, Biogen’s 2Q results knocked the socks off estimates, and the outlook is rosy–even dazzling–due to Spinraza’s uptake. But what got nearly universally overlooked were data Biogen displayed via a poster presentation (only) at the Alzheimer’s Association International Conference in London, July 16-20.

Dave Lashmet for Stansberry Research covered the AAIC in London, and noticed experts taking photos of graphs depicting scientific proof that Biogen’s BIIB-037 drug, also known by the name aducanumab, both removed plaque and stopped Alzheimer’s disease from progressing.

Aducanumab is a monoclonal antibody that Biogen developed with Swiss drugmaker Neurimmune Holding AG (which discovered it and partnered with Biogen ten years ago).

Dr. Dennis Selkoe, from Harvard Medical School, focused his keynote speech on the topic: “the amyloid hypothesis”–how the steady accumulation of amyloid plaque in the brain leads to Alzheimer’s disease. And Dr. Selkoe looked at Biogen’s data both as proof of the hypothesis and a promising treatment for Alzheimer’s. In fact, he used two of the same Biogen graphs from the medical journal Nature.

Dr. Selkoe ended on a hopeful note by saying Biogen has Phase 3 trials running now to confirm these results.

Brain bleeds are a worrisome treatment problem and Biogen is seeking to reduce this rare but dangerous side effect. That may be why Lashmet did not see Biogen’s Phase 3 trial results at the AAIC conference. Biogen has a lower dose for patients at the greatest risk for brain bleeds, but that lower dose takes longer to clear plaques.

Looking at Biogen’s Phase 1b trial results, we can see the lower dose (6 mg) takes a year to remove plaques. That’s why the current Phase 3 trials were designed with an 18-month study time per patient. The higher dose (10 mg) can clear plaques in six months. But that dose only works for about half the patients.

To prove that the lower dose can save the other half, Biogen will need all 18 months. That means that the earliest these Phase 3 trials for aducanumab are likely to wrap this November.

According to Lashmet, Biogen said that its trials were half enrolled in May 2017, so 18 months from then is November 2018. That’s the midpoint of various expectations for these Phase 3 trials to be complete. Biogen also reportedly said that the trial should be fully enrolled by May 2018–so November 2019 is the latest that these results will be available.

Potentially, this is a $20 billion drug, says Lashmet. There are millions of people who will want to lower their Centiloid scores. And no other drugs seem as promising as aducanumab.

Bottom Line:

The huge human need, and consequential massive market, keeps researchers amply compensated to keep going, and it keeps pharmaceutical companies investing, even after decades of billion-dollar losses on failed late-stage Alzheimer’s drugs from some of the very biggest players.

Lashmet notes that BIIB-037 is getting the wave-through treatment from regulators: “This new blockbuster drug has already received what’s known as ‘Fast Track’ designation from the US Food and Drug Administration, so it can move through clinical trials quickly and get in the hands of patients who desperately need it.”

The European Medicines Agency granted it an even higher status–PRIME–for priority medication. It means European regulators will help oversee these trials.

“Keep in mind: This is the first and only neurology treatment to ever receive this relatively new program’s PRIME designation,” Lashmet adds.

All of which makes the case for accumulating BIIB (aducanumab)both for its latest results and rosier forecast, which haven’t depended upon a blockbuster in the wings, and the encouraging data for BIIB. If it proves to be the first safe and effective treatment for AD, shares will pop bigger and louder than a good Fourth of July display.

Huge Caveat:

The quest for a successful Alzheimer’s treatment is now decades old. Far more has been promised than realized, however, as the heartbreaking disease has proven immune to an effective prevention treatment let alone a cure.

And it’s not only because of the fact that it involves human brains and the side effects can be terrifying. Lashmet points out it’s also because there’s still a lot of uncertainty about how Alzheimer’s works, what causes it, and what might slow it down or reverse it, according to Gumshoestocks.com.

Steve's Take: @Biogen's aducanumab makes sense for the #pharma/#biotech-oriented #investor Click To Tweet

Analysts clearly have reined-in their expectations for aducanumab because every other monoclonal antibody that tries to remove amyloid plaque has failed, often in Phase 3 trials. New promising drugs should be approached with a massive dose of skepticism, seeing that over 99% of AD drugs have failed in clinical trials to date. Which doesn’t mean Biogen’s will fail, but it means there are long odds on success and this doesn’t warrant betting the ranch on it.

Again, accumulating a bit more of BIIB (aducanumab) makes sense for the pharma/biotech-oriented investor. Better to watch for early news about the Phase 3 data first, then perhaps make a decision based on a rational risk.

Steve Walker has no position in any stocks mentioned. MedContent Inc. has no position in any stocks mentioned. MondayMorning.com has a disclosure policy.