This past week, Biogen, a leading biotech firm, was granted approval for its controversial Alzheimer’s drug, Aduhelm, by the FDA. Controversial because the efficacy of the drug was very much in question coming out of its Phase 3 trials. Nonetheless, the FDA approved the drug based on its ability to remove a certain form of plaque associated with the disease. Thinking if Biogen got the mechanism of action right, there would be clinic benefit to the patient. Hailed as the first approved drug in the last twenty years to fight Alzheimer’s disease, not just relieve its symptoms, Aduhelm will surely spark patient demand, regardless of efficacy, and could become the bestselling drug in the world in short order. Moreover, while the FDA has, in a sense, made its approval conditional by mandating yet another trial to confirm clinical benefit, the agency has given Biogen nine years to complete the study. All this means that investors may gain more benefit than patients!!
But the real impact may be industrywide. The combination of the success of mRNA technology (the Covid vaccines), new product announcements (Biogen’s Aduhelm) and a more flexible FDA should usher in a new era for the healthcare industry in general and biotech in particular sparking renewed investor enthusiasm.
Not only that, but the sense that growth stocks may have bottomed, the economies around the world are re-opening, and extremely powerful secular trends are accelerating should provide ample catalysts for the next leg of the bull market.