We have increased our fair value estimate of Biogen (BIIG) to $330 from $305 following strong Phase 3 data for lecanemab in Alzheimer’s disease. We had already factored in a 50% probability of approximately $5 billion in sales in 2031 for lecanemab (profits shared equally with partner Eisai), and with this data we increased this probability to 90%. We anticipate accelerated drug approval in January 2023, with full approval and substantial reimbursement from private payers and Medicare by the end of 2023. Biogen’s neurology-focused portfolio and pipeline continue to support a wide moat economic.
Given the strength of the data, we predict that lecanemab could be one of three new Alzheimer’s drugs likely to hit the market in the next two years, followed by Roche’s gantenerumab (phase data 3 expected in November) and donanemab from Lilly (Phase 3 data in mid-2023). We believe there is room for the global market for new Alzheimer’s treatments to exceed $15 billion by 2031, assuming that approximately 10% of patients diagnosed in major markets receive a treatment, with a price in the United States of around $30,000 per year. This price is roughly in line with Biogen’s discounted price for Aduhelm, which had a much lower data set to support its accelerated approval (based on plaque reduction).