Biogen Inc. (BIIB, Financial) has taken a hit at the end of this week on news the company's lead Alzheimer's disease asset has disappointed in an early-stage readout. The company's share price is sliding on the back of the development and a number of analysts are suggesting it spells failure for the program as a whole.
Is this really as big a setback as markets are making it out to be? And if not, what should investors be looking for as indicative of a longer-term turnaround for the program in question?
Let's take a look.
The drug is called BAN2401 and, as mentioned, is targeting the treatment of patients with Alzheimer's, specifically those in the moderate to severe end of the spectrum for this disease. That is an incredibly tough patient population to go after and it is one that scores of companies have tried and failed to achieve any real degree of success in over the past two decades.
The problem is nobody really knows what causes Alzheimer's and, beyond that, what causes it to increase in severity over time. When you do not know what causes something, it is incredibly difficult to go about trying to treat it.
This, of course, has not stopped the space from trying to do exactly that and – over the last five years or so – one of the lead targets has been what is called amyloid plaque. When a patient develops Alzheimer's, amyloid plaques form and collect in the brain. They are a sticky buildup that accumulate outside nerve cells, or neurons, and for some reason, the buildup level increases as the disease progresses.
We do not know why, or even what the link is between amyloid plaques and Alzheimer's, but the correlation between buildup and severity is enough to justify investigation. This has driven Biogen to go after the disease with BAN2401.
As far as the mechanism of action is concerned, BAN2401 is what is called a humanized IgG1 monoclonal antibody (mAb) and it selectively binds to large soluble beta-amyloid protofibrils (which is just the scientific name for the amyloid plaque described above). The idea is that by binding to the amyloid, the drug can help clear the plaque from in and around the nerve cells in the brain.
In turn, the thought is this clearance could help to either halt the progression of the disease or – even better – reverse the severity of it in the late-stage patient population. It is a long shot, but if it works, there is one of the biggest unmet markets in the world waiting for the drug on approval.
So what happened with the latest trial data?
It was a phase II trial set up to offer two data readouts – one at the12-month point post initial dosing and one at the 18-month point. The general consensus in this space is you need to wait 18 months to really get an idea if a drug like this works, mainly because progression is not always linear – patients get better, then worse, then better and so on over short periods of time.
Biogen thought a 12-month measurement, however, might be able to save the company some time and money. Basically, the idea was to take a look at things at 12 months (by way of an independent data monitoring committee) and, if the data was overwhelmingly positive, get started with a phase III trial ahead of the 18-month readout.
It was a nice thought, but, unfortunately, it did not work out that way.
The company did not actually release the numbers (there is a chance Biogen did not even see them, given it was a data monitoring committee that looked at the trial), but we know there is no solid indication of efficacy at the 12-month mark and that Biogen is going to have to wait for the trial to complete before it can initiate a phase III.
What does this mean going forward?
Well, while a positive 12-month readout would have been great, nobody really expected it to turn out that way. There is an 18-month standard approach in this indication for a reason. Markets, however, are not responding to the news with this in mind. The company is trading as if everyone thought the latest readout was a sure thing when it was anything but.
So while the numbers are not what was hoped for, they do not really say anything about chances of success at trial completion and, as a result, the latest readout does not really change anything.
As such, for the more risk-tolerant trader, the current dip in price could be an opportunity to pick up a discounted exposure to the program's eventual completion.
Disclosure: The author has no positions in any of the stocks mentioned in this piece.
