BMO downgrades Biogen, asserts company is spending too much on controversial Alzheimer's drug
Biogen is investing a lot of time and money for a drug that won't pay off for the company or its investors, according to BMO Capital Markets. Analyst Evan David Seigerman downgraded the biotech stock to market perform from outperform, saying in a note to clients Friday that Biogen's controversial Alzheimer's drug is proving to be more trouble than it's worth and the company needs to cut costs. "We think the current view on opex is reflective of a commercial story for Aduhelm that is unlikely to play out: Simply put, Biogen is spending too much on a product that is likely to generate too little," Seigerman wrote. Aduhelm was approved by the Food and Drug Administration in June 2021, but some health officials were publicly skeptical of its effectiveness , and Biogen's high initial price for the drug drew pushback. In January, the Centers for Medicare & Medicaid Services announced that it would only cover the cost of the drug in limited circumstances. Biogen has cut the price of the drug in half in an effort to generate more demand. The company said the drug generated just $3 million of revenue last year. The downgrade comes after Biogen beat estimates on the top and bottom lines for its fourth quarter, but forward guidance for revenue and earnings came in short of expectations. The stock dipped 2.1% on Thursday. With one of its most high-profile drugs struggling, Biogen's stock could be stuck in neutral unless a takeover attempt emerges, according to BMO. "Yesterday's FY21 results lost the last piece of our confidence that management will be able to turn the Aduhelm ship around," the analyst said. BMO cut its price target on Biogen to $238 per share from $260. The new target is 8% above where the stock closed Thursday. — CNBC's Michael Bloom contributed to this report.

A Biogen facility in Cambridge, Massachusetts. Brian Snyder | Reuters