Biogen has found itself increasingly deeper in the quagmire that is the Alzheimer’s disease drug Aduhelm. Like any beleaguered company might do, the Big Biotech is said to be weighing several strategic options.
Biogen has tapped Goldman Sachs to compile a list of potential acquisition targets, Stat reports, citing a person familiar with the companies’ relationships.
Some smaller neuroscience players have featured on Goldman’s roster, according to Stat. These include Biohaven Pharmaceuticals, maker of fast-growing migraine therapy Nurtec ODT; autoimmune disease specialist Aurinia Pharmaceuticals, which has FDA-approved lupus therapy Lupkynis; and Amylyx Pharmaceuticals, which is gunning for an initial public offering amid an FDA filing for an amyotrophic lateral sclerosis candidate.
For now, the shopping list remains hypothetical: Biogen hasn’t engaged in deal talks with any of the companies, the person told Stat.
Biogen has found itself in its current position after the Centers for Medicare & Medicaid Services proposed to limit Aduhelm’s Medicare coverage to patients enrolled in approved clinical trials, a move that would significantly reduce the drug’s reach to just a few thousand patients.
Ahead of the CMS proposal, Biogen had already slashed Aduhelm’s price in half and started working over the details of a restructuring. The company plans to reveal details of the overhaul in the coming months and is targeting $500 million in annual cost cuts.
If the restrictive CMS policy is finalized, “additional waves” of reshuffling will come to protect the company’s bottom line, Biogen CEO Michel Vounatsos told investors during a conference call Thursday.
When asked about whether the company would consider other strategic options, Vounatsos said the management team is “engaging very closely with our board on tactical short-term measures but also strategic options.” He declined to comment further.
The abysmal situation means Biogen should be in the market buying, Mizuho analyst Salim Syed said in an interview with Fierce Pharma in December before the Medicare announcement. However, “I don’t have the confidence that they’ll do it,” Syed added. “It’s never been in their DNA for Biogen to go out and buy anything late stage.”
Biogen did buy British gene therapy biotech Nightstar Therapeutics for $800 million in 2019. Two eye disease gene therapies that came with the deal have since both failed in clinical trials. Syed pointed to that transaction to argue that Biogen tends to acquire early-stage candidates that “don’t really move the needle” in the near term.
For her part, Cantor Fitzgerald analyst Alethia Young wrote in a Friday note that she remains “skeptical about the possibility” of an M&A deal at Biogen—even though it may help the company’s pipeline.
Board tension could also complicate any major changes, Stat reports.
“They have so much conflict at a board level and at a management level that there’s too much gridlock to do anything other than beat the drum of ‘must sell aducanumab, must sell aducanumab,’” Baird analyst Brian Skorney said, as quoted by Stat.
Meanwhile, poor reception of Aduhelm among large hospital systems and now the negative Medicare draft have dealt serious blows to Biogen’s stock performance, which put the Big Biotech itself in a vulnerable position to be a buyout target.
Toward the end of 2021, a report from Korea said Biogen approached the Samsung Group for a potential $42 billion sale. Later, Samsung Biologics, the Korean conglomerate’s CDMO subsidiary with which Biogen has a biosimilar joint venture, came out with a statement denying the rumor.
The question is, who would want Aduhelm, which is a PR disaster and likely a big distraction for any potential acquirer?
“I highly doubt it,” Syed said of a potential Biogen takeover during the December interview. “Nobody wants to inherit Aduhelm.”
What’s more, unlike other large biopharma transactions in the past, Biogen’s other businesses are under pressure.
A potential takeout of Biogen remains “difficult to envision given the pipeline risk and challenges to base business,” RBC Capital Markets analyst Brian Abrahams wrote in a Thursday note. As Syed put it, “Nobody wants a decliner.”