Spinraza Cost Estimates Could Reignite The Drug Pricing Debate

Following the FDA's December approval of Spinraza, Biogen Inc (NASDAQ: BIIB)'s commercial form of nusinersen for the treatment of spinal muscular atrophy, Cantor Fitzgerald analysts warned that the drug may provoke a now-latent debate on drug prices.

"We wonder whether 2017 could start with a somewhat ignominious sector announcement," the firm wrote in a Tuesday memo.

Despite the critical niche Biogen will fill in the medical treatment industry, analysts raised concerns about the $750,000 price tag for an initial year of therapy. Patients will pay $375,000 for subsequent years of Spinraza treatment.

Investor Sentiment: Hesitancy Could Dominate

Not only does Cantor Fitzgerald anticipate a negative intra-industry reaction to the drug price but also a hesitancy on the part of potential Biogen investors.

This factor — coupled with regulatory, commercial and corporate development risks — has prompted an analyst ranking of Neutral or Hold on Biogen with a target price of $293.

Justification For Rating, Target Price

Contributing to the firm's evaluation is an assessment of Biogen's future productivity and capacity for expansion, which are generally unremarkable.

The firm also acknowledged that fresh competition could prove detrimental to Biogen's market hold on multiple sclerosis treatment. New therapies by Genentech may impede on Biogen's domain, and analysts predicted that royalty payments to which Biogen is entitled would not offset losses in product sales.

At last check, Biogen shares were up 1.45 percent at $287.70.