Shares of the biopharma firms Biogen (NASDAQ: BIIB) and Eisai Co. Ltd (ESALY) plummeted above 28% and 34% respectively at 2 PM ET after both the firms decided to end two Phase 3 trials (ENGAGE and EMERGE) for treating patients who are suffering from Alzheimer’s disease. The decision was taken by both the firms after the data analysis committee found that the trials are not going to meet their primary endpoints.
Biogen and Eisai shares hit new 52-week low levels today post the disappointing news. Biogen’s market cap dropped a whopping $18 billion today. It’s worth noting that this is the biggest single-day drop in the stock price since 2005.
Commenting on the trial results, Biogen CEO Michel Vounatsos said, “This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience.”
The futility analysis done by the independent committee found that ENGAGE and EMERGE trials, which are in Phase 3, are not likely to slow down the cognitive and functional impairment on Alzheimer’s patients who were on a monthly dosage of aducanumab. However, the trial didn’t have any safety concerns.
Investors would be worried about this development because Biogen was pinning its hopes on aducanumab for a potential blockbuster drug from its research pipeline. The company is already facing intense competition on its multiple sclerosis and spinal muscular atrophy drugs. With the failure of aducanumab, the biopharma giant now needs to come up with a renewed strategy to diversify its pipeline.
Alzheimer’s disease has been a tough nut to crack for pharma companies with Biogen’s aducanumab joining the list of failed drugs. However, there is a huge unmet need for treating patients who are suffering from this neurodegenerative disease. In the US alone it’s estimated that there are nearly 5.7 million Alzheimer’s patients according to the Centers for Disease Control and Prevention (CDC).
CDC also added that in 2017 health care spending relating to Alzheimer’s and dementia alone has cost a whopping $259 billion. It also stated that if appropriate treatment for the disease is not found, costs are going to increase drastically as the number of people who suffer from the disorder would increase resulting in higher health care costs in the near future.
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With the aducanumab trial halt, pharma companies would be cautious of conducting clinical trials for Alzheimer’s despite huge demand. Since drug development is a time-consuming and costly affair, Biogen’s rivals would not be interested in venturing into this space due to the inherent risks involved, which would hit margins.
Biogen is slated to report its first-quarter results on April 24. Investors would be expecting more updates from the management on how the company is tweaking its strategies to tackle competition and refresh its product pipeline.