When the Food and Drug Administration approved Biogen’s (NASDAQ:BIIB) stock popped to a $468.55 high. BIIB stock failed to overcome the selling pressure in the months that followed.
On Sept. 9, Biogen’s CEO admitted that the launch of Aduhelm, which treats Alzheimer’s disease, had been "slower than we expected." CEO Michel Vounatsos attributed the weak sales to "confusion, misinformation, and controversy." Markets are confused over the FDA’s approval of the drug despite conflicting data. The scientific community has a divided view on the drug’s efficacy.
Scientists may debate the role of amyloid-beta reduction in treating the disease. The high cost is also an issue. Biogen is offering the treatment free of charge amid Medicare uncertainty. The more subjects getting treatment, the more data Biogen will have to prove that the drug works. Conversely, if the drug only works when acute intracranial hemorrhage occurs to reduce plaques and tangles, then its limited reach will also hurt sales.
Investors may consider Cassava Sciences (NASDAQ:SAVA) as an alternative to BIIB stock. Bears have a 14.4% short interest in the stock. One short-seller is attacking Cassava’s clinical data and trying to stop the two studies next. Investors may bet that the FDA will ignore the call. As it reports positive data reads, SAVA stock could return to the over $100 level.
