What are the potential risks related to insurance coverage, pricing, and supply chain that could influence the long‑term profitability of Leqembi after this approval?

Risk Overview

The FDA’s green‑light for weekly sub‑cutaneous (SC) maintenance of Leqembi removes a major clinical hurdle, but long‑term profitability will hinge on three non‑clinical levers:

1. Insurance Coverage & Reimbursement – Medicare’s national coverage determination (NCD) for lecanemab has already been a focal point. While the Alzheimer’s Association’s endorsement may smooth the path, the Centers for Medicare & Medicaid Services (CMS) can still tighten criteria (e.g., requiring amyloid‑PET confirmation, stricter disease‑stage limits, or higher out‑of‑pocket costs). Private payers often follow the CMS playbook, so a narrow NCD would force providers into prior‑authorization battles, slowing uptake and compressing net revenue per patient. Any delay in formulary placement or tier‑2/3 classification would directly erode the drug’s contribution margin.

2. Pricing Pressure – Leqembi’s current list price is roughly $26,000 / patient‑year for the IV regime. The SC formulation could invite price‑competition arguments (e.g., “same molecule, easier administration => lower price”). CMS is likely to benchmark the SC price against the IV product, and any mandated discount or value‑based contract (e.g., outcomes‑based rebates tied to cognitive‑decline slowing) would cut gross‑to‑net revenue. Additionally, the broader Alzheimer‑therapy pipeline (donanemab, aducanumab) may trigger a “price war” that forces Biogen/Eisai to trim margins to protect market share.

3. Supply‑Chain Constraints – Scaling SC delivery introduces new components: autoinjector pens, lyophilized bulk drug, cold‑chain logistics, and a larger fill‑finish footprint. Any bottleneck in pen manufacturing (often outsourced to a single device vendor) or a shortage of critical excipients could create “stock‑out” weeks, prompting clinicians to revert to the IV regimen or competing products. Moreover, the FDA’s post‑marketing manufacturing surveillance could raise compliance costs if batch failures or sterility issues arise, further squeezing profitability.

Trading Implications

The news spike pushed Biogen (BIIB) up ~6% on volume, but the rally is likely to encounter resistance near the 200‑day EMA (~$210) and the recent high‑tightening Bollinger Band. A prudent entry would be on a modest pull‑back to the 20‑day EMA or the $205 support zone, with a stop just below the 50‑day EMA (~$200). Keep a close eye on two catalysts: (i) the CMS NCD announcement (expected Q4 2025) – a favorable decision would trigger a short‑term breakout; a restrictive ruling could spark a 8‑12% correction. (ii) Quarterly supply‑chain updates from Eisai/Biogen (usually disclosed in earnings calls) – any mention of “device vendor constraints” or “fill‑finish capacity limits” should be treated as a bearish signal.

If you’re risk‑averse, consider a vertical spread (buy 210‑call, sell 225‑call) to capture upside while limiting downside to the net premium. For a directional play, a stop‑loss‑protected long (target $235, stop at $200) aligns with the upside potential if coverage and pricing stay intact. Conversely, an inverse ETF position (e.g., SBB or SPY‑inverse) could hedge portfolio exposure should reimbursement or supply issues materialize. Monitoring FDA’s post‑marketing study timelines and CMS’s forthcoming guidance will be critical to adjust position sizing over the next six months.