Biogen Inc. (NASDAQ: BIIB) shares cratered on Thursday morning after the Company decided to terminate its Phase 3 and future clinical trials for its Alzheimer’s disease drug. Biogen shares fell by 28% during Thursday’s pre-market hours.
Biogen was collaborating with Eisai, a Tokyo-based pharmaceutical company. The two decided to discontinue the clinical trials because they believed that they would not meet their primary endpoint. Biogen noted in its press release that the termination of the drug was not due to safety concerns.
“This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience. We are incredibly grateful to all the Alzheimer’s disease patients, their families and the investigators who participated in the trials and contributed greatly to this research,” said Michel Vounatsos, Chief Executive Officer at Biogen.
“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.” concluded Vounatsos.
Biogen’s drug, Aducanumab (BIIB037) is an investigational compound which was being studied to treat Alzheimer’s. The drug is a human monoclonal antibody (mAb) derived from a de-identified library of B cells collected from healthy elderly subjects with no signs of cognitive impairment.
The two companies conducted its clinical trials: ENGAGE and EMERGE, both of which were in phase 3 trials to evaluate the efficacy and safety. The primary objective of both studies was to evaluate the efficacy of the monthly doses of aducanumab compared with the placebo in a slowing cognitive and functional impairment.
The discontinuation of the Alzheimer’s drug was a major setback for Biogen because it was one of its most anticipated drugs. Goldman Sachs projected previously that Biogen’s drug sales could reach USD 12 Billion.
“This was the largest opportunity and the most high-profile pipeline event for trial events in the entire space, you could argue, let alone for Biogen,” said Jared Holz, a healthcare analyst at Jefferies. “We’ve been talking about this for several years with an expectation we’d get a readout in 2020. There was obviously a chance you could have a futility analysis in 2019, but investors thought we were past that point.”
“All you are left with now is a value stock – it’s essentially Gilead, a cheap stock with an unproven pipeline and a company that will be more reliant on M&A,” Holz added.
Biogen’s discontinuation of the drug also led other analysts to downgrade their ratings for the stock.
“We expect Biogen’s stock to trade down to USD 240-260 (~20%) on this negative news, and we cannot find any near term catalysts that would help the stock recover back above USD 300,” SVB Leerink analyst Geoffrey Porges said in a note.
Morgan Stanley analyst Matthew Harrison called the discontinuation of the trial “a major negative.”