Why Biogen's June 7 Aducanumab PDUFA Date Is A High-Risk, High-Reward Catalyst

As the day of reckoning for Biogen Inc.'s (NASDAQ: BIIB) controversial Alzheimer's product candidate aducanumab draws close, an analyst at Oppenheimer looked at the implications of the binary event for the company.

The Biogen Analyst: Analyst Jay Olson has an Outperform rating on Biogen with a $325 price target. 

The Biogen Takeaways: The Food and Drug Administration is scheduled to rule on Biogen's aducanumab biologic license application by the June 7 PDUFA date.

Oppenheimer sees equal probabilities of aducanumab receiving approval or facing rejection, Olson said in a note.

The shares are likely to move 21% higher if the FDA hands down a positive verdict or 11% lower on the receipt of a complete response letter, he said. 

This equates to a probability-adjusted expected move of over 5% for Biogen shares based on Oppenheimer's model assumptions and implied volatility, Olson said.

The analyst sees the binary event as a "high-risk/reward" catalyst.

"Our 50% POS estimate reflects the deep controversy surrounding aducanumab's potential for FDA approval." 

This is based on the assumption that uptake is only in APOE4 carrier patients with mild Alzheimer's disease; the annual U.S. net price is $30,000; and peak market penetration is around 12%, the analyst said. 

The risk-adjusted peak sales forecast for aducanumab is about $2.7 billion in 2030, according to Oppenheimer. 

BIIB Price Action: At last check, Biogen shares were down 0.93% at $278.39. 

Related Link: Attention Biotech Investors: Mark Your Calendar For May PDUFA Dates