Image: Michel Vounatsos. Source: Biogen
Biogen (BIIB) announced Tuesday that it has begun a search for a new CEO in the wake of the commercial failure of its controversial Alzheimer's disease drug, Aduhelm.
The announcement of the impending departure of Michel Vounatsos was buried on page 6 of the company's 19-page first quarter earnings release.
The company said Vounatsos would keep the seat warm until a successor was named.
Biogen said it would "substantially eliminate commercial infrastructure for Aduhelm," i.e., it would no longer spend any money to market the drug.
Aduhelm
The FDA approved Aduhelm in June 2021 against the strong recommendation of its Peripheral and Central Nervous System Drugs Advisory Committee.
That committee voted resoundingly against approval, stating that the data did not support its effectiveness in treating Alzheimer's disease.
When the FDA shockingly granted approval, 3 of the 11 members of the committee resigned, including David S. Knopman, a neurologist at the Mayo Clinic, Joel S. Perlmutter, a neurologist at Washington University in St. Louis, and Aaron Kesselheim, a professor of Medicine at Harvard Medical School.
In his resignation letter, Kesselheim called the Aduhelm approval "probably the worst drug approval decision in U.S. history."
Kesselheim further stated, "It is clear to me that FDA is not presently capable of adequately integrating the Committee's scientific recommendations into its approval decisions."
Investment thesis
This is usually where we give you some reasons to be optimistic about a stock, but we don't recommend investors try to be brave here.
Elsewhere in Biogen's Q1 report, the company reported Q1 sales of Aduhelm of only $2.8 million, significantly below expectations. Beyond the controversy behind the drug, Medicare determined that it would only pay for the drug for people who received it as part of a clinical trial, further capping any realistic upside.
Biogen stock has lost more than 55% since peaking last summer, and we see no reason to fight the tape, at least until a new CEO is named.
Further, investors should expect significant changes structurally at Biogen, including the possibility of divesting certain R&D programs while accelerating others. Until we have any visibility about what those changes might entail, we can't recommend being long this stock.
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Source: Equities News
