The stock market has not priced in the potential upside for new drugs from Biogen , according to investment firm Needham. Analyst Ami Fadia initiated coverage of the stock with a buy rating, saying in a note to clients on Wednesday that the company's controversial Alzheimer's drug Aduhelm will be a big seller for the company long term. The drug was approved by the FDA in June even after the agency's independent panel of outside experts recommended against it, citing unconvincing data. "Our physician survey suggested that insurance coverage will be a hurdle for adoption initially; however, we believe that given the large market and significant unmet need Aduhelm will be a significant blockbuster," the note said. The high price of the drug is part of the controversy, and demand appears to have been slow. Management at Biogen's Investment Day said Wednesday it is facing "near-term challenges with the launch of Aduhelm," according to a transcript from FactSet. However, Needham said the drug should still be a long-term financial success for Biogen, along with other potential drugs in development. "Despite the controversy around the Aduhelm's clinical data and pricing, we believe the product will be a blockbuster given the significant unmet need in the market," the note said. "Aduhelm's ramp along with visibility into Biogen's pipeline should drive momentum in the stock." Needham set a price target of $400 per share for Biogen, which is 38% above where the stock closed on Wednesday and near where the stock briefly surged to after Aduhelm was approved in June. -CNBC's Michael Bloom contributed to this report.
A Biogen facility in Cambridge, Massachusetts.
Brian Snyder | Reuters
The stock market has not priced in the potential upside for new drugs from Biogen, according to investment firm Needham.