Piper Sandler downgrades Biogen as Alzheimer's drug hits another speedbump
Piper Sandler on Wednesday downgraded Biogen after the biotechnology company faced another hiccup in the rollout of its Alzheimer's drug. Medicare on Tuesday said it would limit coverage of Biogen's Aduhelm medication only to patients who are willing to enroll in qualifying clinical trials. Biogen shares were down roughly 10% in the premarket Wednesday. "Combining this with continued pressure on the base business and little in the way of pipeline backfill, we think the right thing to do here is cut our losses and move on," Piper Sandler's Christopher Raymond said in a note after the Medicare decision. Piper Sandler lowered its rating on the stock to neutral from overweight. The firm also cut its price target on the stock to $216 from $362. The new projection implies 10.6% downside from Tuesday's close. Aduhelm is the first treatment approved by the Food and Drug Administration in the U.S. to treat cognitive decline in Alzheimer's patients, but it has sparked controversy in the medical community . The FDA's independent panel of outside experts had recommended against approving the treatment, citing unconvincing data. The drug also has a hefty price tag and some doctors have refused to prescribe the medication. "Our upgrade thesis – that while neurologists may not believe in Aduhelm's clinical premise, they'll prescribe it anyway – has clearly not played out," Raymond said. A majority of neurologists in a September survey said the efficacy of Aduhelm is the primary barrier to prescribing the drug, Piper Sandler highlighted. Plus, the firm sees limited good news down the line with Biogen's other drug developments. "We are hard-pressed to see anything in Biogen's pipeline to meaningfully change the narrative here," Raymond said. Biogen shares lost 2% in 2021, compared with the S & P 500's nearly 27% gain. The stock had been up 0.7% in 2022 through Tuesday's close. —CNBC's Michael Bloom contributed reporting.

A sign marks a Biogen facility, in Cambridge, Massachusetts, March 9, 2020. Brian Snyder | Reuters