Biotech firm Biogen could double its market cap on regulatory approval for its experimental Alzheimer's drug, aducanumab, CNBC's Jim Cramer said Wednesday.
Biogen, with a $54.1 billion market cap as of Wednesday's close, "could be worth twice that if all goes well" with the Food and Drug Administration, the "Mad Money" host said.
In March, Biogen pulled the plug on its drug and sent its stock tanking after an analysis from an independent audit revealed the experimental medicine was unlikely to work. However, shares of the Cambridge-based company soared more than 26% on Oct. 22 after the drugmaker shocked investors by announcing it was seeking regulatory approval for the drug.
Biogen said that a new analysis of a larger dataset showed that aducanumab "reduced clinical decline in patients with early Alzheimer's disease" and patients who received the drug "experienced significant benefits on measures of cognition and function such as memory, orientation, and language."
Biogen's drug targets a compound in the brain known as beta-amyloid, which was believed by many scientists and drugmakers to play a role in the devastating disease by eroding synapses between nerve cells.
There are currently no drugs approved that can reverse the mental decline from Alzheimer's, which is the sixth leading cause of death in the U.S. The FDA has approved Alzheimer's drugs aimed at helping symptoms, not actually reversing or slowing the disease itself. Biogen's drug would be worth billions.
The stunning reversal from Biogen was initially met with deep skepticism from investors, but Cramer expects that will change.
"I think they'll ultimately become believers because Biogen resumed work on this drug at the behest of the FDA," Cramer said. "There are still more holds than buys on the stock, which sells for nine times earnings. It's crazy."
Shares of Biogen closed Wednesday up nearly 1% at about $299 a share. The stock has rallied 34% since it announced it was seeking approval for its Alzheimer's drug last week.
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