Biogen, a multinational biotechnology company, just suffered massive setbacks after the company halted two Phase 3 clinical trials for aducanumab, a drug designed to slow the adverse effects of Alzheimer’s. The drug was designed to target brain-destroying protein fragments known as beta-amyloids. Once promising, Aducanumab successfully reduced beta-amyloid plaque levels in mice during earlier phases but has been deemed “unlikely to be effective” following an internal study at Biogen. The results serve a big blow to advocates of the beta-amyloid hypothesis, once one of the most accepted theories.
A high risk, high reward gamble in “an unrelenting disaster zone,” Alzheimer’s drug treatments have been the El Dorado to biotechnology companies for the past 15 years, highly sought after but never discovered. Biogen is but one of the latest companies to succumb to disappointing results, following the footsteps of other companies such as Merck and Lilly whose recent attempts at developing an Alzheimer’s’ treatment showed ineffectual results.
In the wake of this news, Biogen’s shares dipped 25%, erasing more than $18 billion dollars from the company’s market value. Many institutional investors, such as hedge funds AQR Capital Management LLC and OrbiMed Advisors LLC, are reeling from the drastic decrease in price especially because both have substantial stakes in the company. As such, Biogen and other companies whose future value bank on high research cost, experimental drugs pose an increasingly debatable investment choice given the inherent uncertainty of the nature of such research.
Industry players will likely scrutinize Biogen’s next actions, which implicate the future development of Alzheimer’s treatment and the landscape of biotechnology R&D shops. The nearly $800 million lost in R&D for aducanumab sends a strong signal that Biogen’s research should focus more on short term projects to hit the company’s profit projection of $3 billion in sales by 2023. The silver lining to this ordeal spells good news for smaller biotechnology startups, as Biogen will likely attempt to generate growth and “replenish their pipelines via acquisitions.” Biogen may very well follow the path of Pfizer, a biotechnology company who cut R&D and turned to acquisitions to further growth, after the failure of a drug costing the company 10% in value.
Picking up the Pieces – What’s Next after Biogen’s Costly Failed Drug Trial?