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FDA Approval of the Alzheimer’s Drug is Vital

The US Food and Drug Administration (FDA) will make its final decision on whether to approve aducanumab, Biogen’s Alzheimer’s disease drug, by next Tuesday. The FDA’s decision, which has been the most awaited in recent memory, is expected to influence Biogen stock and stock in the biotech and biopharma industries as well.

RBC Capital Markets analyst Brian Abrahams lays out the potential second-order ramifications of the aducanumab decision in a note released early Tuesday. He warns investors not just to expect a big increase in Biogen stock (ticker: BIIB) but also in the supply of other Alzheimer’s medicine companies with aggressive treatments awaiting FDA approval.

Denali Therapeutics (DNLI), Sarepta Therapeutics (SRPT), Ionis Pharmaceuticals (IONS), Eli Lilly (LLY), and Intercept Pharmaceuticals are among the companies Abrahams believes could see their stock prices alter as a result of the aducanumab decision (ICPT). Furthermore, according to Abrahams, Biogen and its aducanumab partner, Eisai (ESALY), are large enough that a significant change in their share prices will impact stock indexes on its own.

Biogen’s stock has gained 9.2% this year but is expected to lose 11.3 percent over the following 12 months. In the recent premarket trade, the stock was up 1.8 percent. The FDA deadline for deciding on aducanumab is June 7, though an announcement could come sooner. The decision by FDA has previously been postponed—the original deadline was March 7, but the agency announced a postponement in late January.

The decision was made amid a drop in biotech stocks. This year, the SPDR S&P Biotech ETF (XBI) has lost 9.2 percent. The aducanumab ruling might wreak havoc on the industry.

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