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Biogen shares drop over 29% after Alzheimer's trial halt with Eisai


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Biogen shares drop over 29% after Alzheimer's trial halt with Eisai

Biogen Inc. stocks dropped more than 29% after news that the biotechnology company and Japan's Eisai Co. Ltd. would be discontinuing two late-stage clinical trials of their Alzheimer's drug aducanumab.

Biogen shares fell to $226.88 apiece as of the close of U.S. trading on March 21, down 29.23%. The Tokyo stock exchange, on which Eisai shares trade, was closed on the same day.

The drug aducanumab was intended to break down amyloid plaque buildup that is thought to worsen Alzheimer's disease. The companies stopped the phase 3 trials, called Engage and Emerge, after a futility analysis showed they would likely not meet their goals.

Stifel analyst Paul Matteis predicted that shares of Biogen could slide to $200 to $240 as the company's other pipeline prospects are few and commercial products face low growth potential.

The Cambridge, Mass.-based Biogen could potentially be the target of an acquisition, Matteis said. But with pressure mounting, it could also either sell assets or acquire others to bolster its standings, he said.

"It's uncontroversial to say that Biogen now has a serious growth problem, and even before today many investors had hoped that Biogen would buy one of the multiple attractive assets in [central nervous system therapies], such as Sage Therapeutics Inc. or Neurocrine Biosciences Inc.," Matteis wrote in a March 21 note.

Biogen CEO Michel Vounatsos said the company did not plan to engage in M&A in the near future on the company's most recent earnings call in January.

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"We will not go for bridging a potential gap; we are not on a burning platform," Vounatsos said at the time.

Leerink analyst Geoffrey Porges said the company's prospects are too few to make up for the loss of the aducanumab program.

"We expect Biogen's stock to trade down to $240-260 (~20%) on this negative news, and we cannot find any near term catalysts that would help the stock recover back above $300," Porges said.

Biogen and Eisai are still working together on the Alzheimer's drug BAN2401, but that one has also failed to demonstrate enough promise in clinical trials so far. The drug failed to meet a mid-stage endpoint in December 2017.

Alzheimer's is a particularly risky disease for a company to take on despite the potential tremendous payoff for a successful product. Companies including Roche Holding AG, Pfizer Inc., AstraZeneca PLC, Eli Lilly and Co. and Axovant Sciences Ltd. have met with failure in Alzheimer's treatments.

Outside of Alzheimer's prospects, Biogen depends primarily on its multiple sclerosis franchise, which includes blockbuster Tecfidera. The medicine generated $4.28 billion in sales in 2018, but that was only a growth of 1% year over year, and the drug faces a patent cliff that could erode sales in the next decade.

Evercore analyst Umer Raffat said on a webinar that, according to Evercore models, true erosion for Tecfidera would occur in 2024.

The company also relies on the growth of its spinal muscular atrophy drug Spinraza, which brought in $1.72 billion in 2018.

In its pipeline, Biogen has the drugs BIIB093 for stroke, BIIB098 for multiple sclerosis and another Alzheimer's candidate with Eisai, the BACE inhibitor elenbecestat.