Biogen Stock Slips As It Unveils New Test In Alzheimer’s Treatment

Biogen (BIIB) and Japan’s Eisai announced a new study in Alzheimer’s treatment Friday following a high-profile failure this week that sent Biogen stock into a tailspin.


In morning action on today’s stock market, Biogen stock slipped 3.1%, near 219.90, in high volume. On Thursday, Biogen and Eisai terminated two studies of a drug called aducanumab in Alzheimer’s treatment after a committee said it would likely fail.

Aducanumab targeted a problematic plaque in the brain known as beta amyloid. On Thursday, one analyst said the beta amyloid theory of Alzheimer’s treatment is “dead.” Leerink analyst Geoffrey Porges, on Friday, called for Biogen to halt its efforts in beta amyloid-directed medicines.

But on Friday, Biogen and Eisai announced a plan to study another drug called BAN2401 in early Alzheimer’s treatment. BAN2401 uses the same mechanism as aducanumab to target beta amyloid in the brain. Biogen still has ongoing efforts with other beta amyloid drugs.

“At this stage, given the lack of any (effectiveness) benefit from aducanumab in large well-designed Phase 3 trials, we regard any further investment in such trials as a complete waste of capital, and suspect the vast majority of investors will have the same view,” Porges said in a report to clients.

Beta Amyloid In Alzheimer’s Treatment

Biogen’s conviction surrounding beta amyloid stemmed from a single Phase 1b study called Prime, Porges said. At the time, aducanumab showed a positive trend in Alzheimer’s treatment, but that signal diminished with each successful test, he said.

“With hindsight, that study clearly provided a flawed signal, and investors and clinicians will spend many years reflecting on the lessons of that failed signal and why it wasn’t recognized as such by those closest to the information (at Biogen),” he said.

In addition to BAN2401, Biogen and Eisai are also testing a drug called elenbecestat in Alzheimer’s treatment. The mechanism behind elenbecestat differs from that of aducanumab and BAN2401, but the experimental Alzheimer’s treatment still targets beta amyloid in the brain.

Biogen should acknowledge and accept “the futility of these efforts,” and halt those studies, Porges said. In recent years, Pfizer (PFE), Eli Lilly (LLY) and Roche (RHHBY), have scrapped tests in Alzheimer’s treatment.

Downgrades Pour In For Biogen Stock

Porges cut his price target on Biogen stock to 247 from 341, but kept his market perform rating. He expects investors to remain uneasy about Biogen’s pipeline. Even without aducanumab, Biogen has five experimental Alzheimer’s treatments in testing. Two of those target beta amyloid.

“Biogen finds itself in the unenviable position of being a wounded cash cow,” he said. “The next few months are likely to consist of a mixture of recriminations, explanations, negotiations and possibly terminations and litigation.”

He expects the company to explore asset sales and purchases. Biogen’s biggest moneymaker, a drug for multiple sclerosis called Tecfidera, is facing a patent battle. Further, its spinal muscular atrophy treatment, Spinraza, is soon to face competition from Roche and Novartis (NVS).

UBS analyst Carter Gould noted those dynamics as he downgraded Biogen stock to a neutral rating from buy. He also slashed his price target to 242 from 395 in the wake of the Alzheimer’s treatment failure. He called for Biogen to seek a merger to expand its pipeline. But he’s unsure how rapid that process could be.

“Investor focus on Biogen escalating its M&A pace is likely only to intensify,” he said in his note to clients. “The company’s conservative and patient approach to the topic will likely be tested.”


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