Investors are likely to push for Biogen to make an acquisition after worries regarding its chances in Alzheimer’s disease sent shares into a tailspin this week, analysts said Thursday.
It all started Wednesday, when Dow’s Merck said its drug, part of a class called BACE inhibitors, failed. That didn’t bode well for Biogen’s own BACE inhibitor called elenbecestat.
But Biogen told analysts it is expanding its trials of a second Alzheimer’s drug it is developing, aducanumab, by 510 patients to contend with greater-than-expected variability in the key goal of the trial.
“Investor drumbeat on business development will get louder in our view,” Canaccord analyst Sumant Kulkarni wrote in a note to clients. “We believe investors will continue to look for action from Biogen on the business development front.”
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In addition to Alzheimer’s worries, Biogen’s multiple sclerosis drug Tysabri recently failed in a stroke trial, its spinal muscular atrophy drug Spinraza is likely to face competition in the future and Biogen is still facing headwinds in its multiple sclerosis business.
Kulkarni noted Biogen has “significant financial flexibility” to seek deals. Biogen ended 2017 with $6.7 billion in cash, equivalents and marketable securities on hand and about $5.9 billion in notes payable and other financing arrangements.
Analysts Split On Alzheimer’s
Biogen decided to expand its late-stage trials of aducanumab in early-stage Alzheimer’s due to greater variability on the key goal of the study than was originally expected. The change was based on a prespecified plan, Kulkarni said.
Aducanumab differs from BACE inhibitors. The former aims to remove plaque buildup called amyloid in the brain associated with Alzheimer’s. BACE inhibitors, like Merck’s verubecestat, work to prevent the buildup.
Full enrollment in the aducanumab trials is still expected in the summer with final results likely in early 2020, Leerink analyst Geoffrey Porges wrote in a note to clients.
The biotech also noted the dropout rate has been lower than expected and the rate of serious adverse events has been within expectations.
Other Trial Expansions
It’s not the first time Biogen has expanded a trial. The firm did so previously with multiple sclerosis drug Tecfidera.
“We are inclined to believe that Biogen is employing a conservative approach in all these cases and the sell-off (Wednesday) is more of an eruption of the accumulated pressure on investors by the repeated failure of amyloid-directed therapies,” Porges said.
Canaccord’s Kulkarni, on the other hand, says Merck’s failure Wednesday and Biogen’s trial change are likely to cause some investors unease. Biogen tanked 6.6% on the news.
“While it is difficult for us to draw any definitive conclusions based on the change in the aducanumab trial or Merck’s decision on its BACE, we believe these developments lead some investors to ask renewed questions around anti-amyloid beta approaches to tackling Alzheimer’s disease,” he said.
Date: March 25, 2019
Source: Investors Business Daily
