Biogen Plunges 30% On Suspension Of Alzheimer Drug Trial

Biogen Plunges 30% On Suspension Of Alzheimer Drug Trial
March 22, 2019

 

Shares of Biogen Inc. (Nasdaq: BIIB) plunged 29.23% to close at $226.88 in yesterday’ trading after the biopharmaceutical firm and the Japanese pharmaceutical company, Eisai Co. Ltd. (ESALY.PK), jointly announced that they would suspend two late-stage trials for their Alzheimer drug candidate Aducanumab.

 

Biogen’s product pipeline almost void

Cambridge, Massachusetts-based Biogen, and Tokyo-based Eisai said they chose to terminate trials of Aducanumab, which was touted as a potential drug candidate for Alzheimer’s, after the outcome of a futility assessment performed by a third-party data tracking review panel stated that the trials might not achieve their primary objective upon completion. The firms added that the decision to halt trials was not based on issues related to side effects.

In addition, Biogen and Eisai divulged that they would forgo the safety study of EVOLVE Phase 2 and the prolongation of Aducanumab’s PRIME Phase 1b study. The companies will evaluate the beginning of the Phase 3 secondary prevention trial of Aducanumab while examining the data pertaining to ENGAGE and EMERGE trials. Since October 2017, Biogen and Eisai have worked collaboratively to build and market Aducanumab worldwide.

Alzheimer’s disease is an irreversible and progressive brain illness that causes memory, cognitive, and physiological problems. A survey indicates that 5.7 million Americans have Alzheimer’s disease, and this figure is anticipated to surpass 7.1 million by 2025. The study’s primary goal was to assess the effectiveness of monthly shots of Aducanumab in declining behavioral and functional disability, in comparison to a placebo. Secondary objectives were to determine the clinical headway of monthly shots of Aducanumab, in contrast to placebo.

The two Phase 3 studies, ENGAGE and EMERGE, are “multi-center, randomized, double-blind, placebo-controlled, parallel-group studies” engineered to assess the effectiveness and harmlessness of Aducanumab in patients with moderate cognitive disability due to Alzheimer’s disorder and minor dementia. Biogen and Eisai had plans to submit elaborate information from the two Phase 3 trials at upcoming medical conferences.

Fast track classification for the development and testing of Aducanumab has been accorded by the U.S. Food and Drug Administration. Such a classification permits priority assessment for drugs presumed to have the capability to treat severe conditions and address vital unfulfilled medical requirements.

Commenting on the suspension, Michel Vounatsos, Chief Executive Officer at Biogen said: “This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience.”

With the suspension of the trial, the number of amyloid-focused drugs for Alzheimer’s disease (AD) has shrunk further. It’s a big failure and another setback to amyloid hypothesis, which maintains that obstructing amyloid plaque creation that defines the illness could assist in averting the associated deterioration of neurons.

So far, the expenses for trialing dozens of amyloid-focused drugs in AD have exceeded billions of dollars and have not shown any positive or consistent effects. Furthermore, the current range of drugs has minimal impact on postponing behavioral declines. The possibility of a successful result has always been minimal, but with potentially huge incentives if Aducanumab could even have a marginal positive impact on AD deterioration, with analysts forecasting multibillion-dollar revenues for an effective AD drug that could tackle the underlying pathology of the illness.

Biogen especially has suffered a knock because it has made huge bets in amyloid-targeting drugs. Notably, the company has two more candidates in development. With Aducanumab now out of the fray, the company has huge expectations on “phase 3 candidate elenbecestat – a drug in the BACE inhibitor class” which has already faced a multitude of failures – and “amyloid targeting antibody BAN2401 in phase 2.”

RBC analysts have now erased all AD-related revenues from their Biogen forecasts, effectively putting the biotech in significant danger of a pipeline vacuum as it copes with competition to its successful drugs.

Commenting on the failed trial, investment research firm Jefferies said: “Biogen is now essentially Gilead, a cheap stock with an unproven pipeline and a company that will be more reliant on M&A.”

In a note to investors, Paul Matteis, an analyst at Stifel, said: “It’s uncontroversial to say that Biogen now has a serious growth problem.”

However, Michel Vounatsos, chief executive officer at Biogen, is optimistic that things will turn around for the company. Vounatsos said: “Biogen’s history has been based on pioneering innovation, learning from successes and setbacks. Driven by our steadfast commitment to patients and our strong business foundation, we will continue advancing our pipeline of potential therapies in Alzheimer’s disease and innovative medicines for patients suffering from diseases of high unmet need.”

Despite the management’s optimism, investors are likely to keep their distance until the company succeeds in trials or launches new drugs.

Technically, the stock has broken below its 50-day moving average. Additionally, the MACD indicator’s reading has turned negative. As a result, we can anticipate the stock to move down in the short-term.

bii - technical analysis - 22nd March 2019

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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