Biogen deflects claims it misled shareholders about Aduhelm's success

As Biogen attempts to shake off its ill-fated Aduhelm launch, the Big Biotech is turning its attention to disgruntled shareholders.

Biogen is angling to parry claims it misled investors on the assumed success of its Alzheimer’s disease med, Aduhelm. Wednesday, the Big Biotech filed a motion in Massachusetts federal court to dismiss a lawsuit brought by shareholders in February. The suit alleges that Biogen knew its drug was flawed but pushed for approval regardless.

While the company admits its Aduhelm rollout was a dud, it countered that the investors’ lawsuit fails to show the company concealed insights into the downturn its stock would take amid the fallout of the drug’s launch.

The drug’s approval was a “source of enormous hope for Biogen on behalf of patients and the company,” while its flop of out the gate was a “source of great disappointment,” the company's lawyers added in its court filings. Still, Biogen asserts, it never promised the drug would become a “commercial success.”

The shareholders' complaint hinges principally on claims that Biogen fraudulently misled the market on the willingness of doctors and institutions to prescribe Aduhelm as well as “the extent to which private and public insurance providers would pay for the costs of treatment,” Biogen explained in its court filing.

Biogen’s controversial Alzheimer’s med snagged an accelerated approval from the FDA last June. The FDA’s nod sent Biogen's shares up more than $100 apiece. The speedy green light came after Biogen in 2019 announced it was abandoning the drug. Shortly thereafter, a group of Biogen executives began meeting with the FDA’s Director of the Office of Neuroscience to scout out an approval path, investors allege.

Those meetings have since fallen under the scrutiny of the FDA, Congress, the Federal Trade Commission and the U.S. Securities and Exchange Commission, according to a shareholder alert issued in February.

Over time, Aduhelm’s efficacy and safety came into question, too, and several members of an FDA advisory panel, who recommended against the drug’s approval, resigned in protest.

The situation came to head this January when the Centers for Medicare & Medicaid Services (CMS) issued a draft proposal to restrict Aduhelm coverage to patients in approved hospital-sponsored clinical trials. On that news, Biogen’s stock fell to $225, which was more than 40% lower than where shares traded on the day of the drug’s approval, shareholders contend. CMS’ decision has since become official.

“Biogen's market capitalization declined by almost $25 million between June 7, 2021, and January 12, 2022, causing investors significant losses,” the investor alert continues.

But as far as Biogen is concerned, plaintiffs have failed to show the company made any misleading statements during the time span between Aduhelm’s approval and CMS’ draft decision, Biogen argues in its motion.

“The Complaint identifies twenty-five statements contained in earnings calls and investor conference transcripts that allegedly misled investors, but none are actionable,” Biogen said.

Biogen specifically pointed to statements it made regarding discussions with third-party payers and others concerning Aduhelm’s price. While plaintiffs allege those statements “‘suggest[ed]’” that payers had “’approved, acquiesced, or at the very least indicated a willingness” to pay the roughly $56,000 annual price tag Biogen initially set for the drug, those statements suggest “no such thing,” Biogen argued. Instead, they simply indicate the company was in talks with payers and other pharma middlemen about Aduhelm’s cost.

Biogen also took aim at the portions of the complaint tied to allegations from eight former Biogen employees. The company claims the shareholders’ “allegations are generalized statements that are replete with vague adjectives and adverbs and lack the specificity that the First Circuit requires for allegations attributed to confidential witnesses to be sufficient under the PSLRA to establish the elements of a claim.”

As an example, plaintiffs argued Biogen’s estimate that some 900 healthcare sites across the U.S. would be ready to treat patients with Aduhelm after approval was false or misleading, because two former employees had said that “many potential treatment sites” and “many hospitals and clinics” were not ready, Biogen asserts.

“Adjectives cannot substitute for specific factual allegations showing falsity or scienter, and stripped of those adjectives, the 'facts' attributed to the former employees are not contrary to Defendants’ public statements,” Biogen continued.

Litigation aside, Biogen continues to feel the sting of its rocky Aduhelm launch. The drug’s troubled rollout prompted the company to unveil a $1 billion cost-cutting scheme in March, and, since then, Biogen’s head count has dropped considerably in Massachusetts, the Boston Business Journal first reported.

Earlier this year, Biogen said it planned to “substantially eliminate” its commercial infrastructure for Aduhelm; at the time, it also announced that the company was bidding adieu to its five-year CEO Michel Vounatsos.

And earlier this month, Biogen also unveiled a sizable Aduhelm inventory write-off. In a recent Securities and Exchange Commission filing, the company said its Aduhlem inventories as of June 30 were "de minimis," or functionally worthless. That was $233 million lower than at the end of 2021, meaning the company wrote off the remaining value of its Aduhlem inventories in the first half of this year.