Biogen, a biotechnology company announced that their clinical trial for multiple sclerosis treatment failed, pulling their stock down last Tuesday, June 7. The company shares drop to 12.8 percent with a $252.56 price per share. The stock drops based from its 50-day and 200-day moving averages.
The company’s lead drug opicinumab, or also known as anti-lingo failed to meet the primary and secondary endpoint in the mid-stage trial. At this stage, the company has to measure the improvements of patients in terms of the cognitive and physical functions. The disease progression and disability profile will also be included in the assessment.
However, Biogen noted that there was an observable clinical effect with the unexpected dose-response. The company pointed out that they are still analyzing the complex results of the study and they are considering having another clinical trial.
Analyzing How Investors Behave on Anti-Lingo
Anti-lingo utilizes a new technology that promises to rebuild myelin, which is a fatty layer covering the nerve cells. In patients suffering with Multiple Sclerosis or MS, the protective sheath usually erodes. Biogen hopes to reverse the progression of Multiple Sclerosis by targeting the myelin sheath.
Last year, the company released the result of the optic neuritis trial. Optic neuritis is a kind of vision loss in Multiple Sclerosis patients which is associated with demyelination. The result was technically positive but still uncertain, thus, the expectation for the success of the trial is actually low.
Michael Yee, RBC Capital Market Analysts noted that Biogen’s research is one of the most unpredictable and unknown experimental trial that a company would invest in. He also noted that it shows the dynamic behavior of investors to put their money into a company that promises a high risk and high reward in their drug pipeline. Yee points out that it is very hard to be convinced into something without having a concrete data yet investors put their money on it. Probably, the investors are looking at the possibility that if the trial is successful it will generate more revenue.
This is not the first time where Biogen invested in a high risk and high reward clinical trial. They also had a similar experimental trial with Alzheimer’s disease. In the initial trials, the results were very promising, but a lot of investors also doubted the study because Alzheimer’s disease is known to have a long history of treatment failure.
The next report for Biogen’s experimental trial on Alzheimer’s disease is not expected to be released within a year.
Eli Lily, a global pharmaceutical company will release another report for a drug that targets Alzheimer’s disease which is expected to be released later this year.
Biogen’s Risky Gamble
Biogen’s risky gamble with Multiple Sclerosis treatment pictures how biotech companies are serious in investing on drugs that targets rare diseases. These companies are putting on millions or billions of dollars to fund their research and experimental trials. Although, most companies invest on treatment with a high probability of success and generating potential revenue, Biogen works on a high risk, high reward drug pipeline.
This is an unusual event for some analysts calling it a big gamble. But Biogen takes all the risks hoping that they could generate big revenue out of it.