Biogen Surges After Positive (But Vague) Report on Alzheimer's Trial

Alzheimer's disease - neurons with amyloid plaques

Biogen Inc. surged the most in seven years after an Alzheimer's drug showed positive results in a large clinical trial, raising hopes for treatment of a disease that has befuddled researchers for decades.

Alzheimer's progressed more slowly for patients who got the highest dose of the experimental drug, BAN2401, Biogen and its Japanese partner Eisai Co. said in a press release. The results, which came after 18 months of treatment, took investors by surprise. The companies reported a failure in December, based on data on 12 months of treatment.

Biogen did not give any numbers showing how much the treatment affected the ability of the patients to function, or how the level of amyloid in the brains of the patients receiving BAN2401 compared with the level of brain amyloid in the patients in the control group.

Biogen did say, in the press release, that a final analysis of 18 months of results "demonstrated statistically significant slowing in clinical decline and reduction of amyloid beta accumulated in the brain… Further, the highest treatment dose of BAN2401 began to show statistically significant clinical benefit … as early as 6 months, including at 12 months."

While the ultimate outcome remains far from certain, the study is a bright spot — if a tenuous one — in the search for a treatment for Alzheimer's, where more than 100 experimental drugs have failed. Drugmakers have persisted in part because of the size of the potential market — as much as $30 billion in the U.S. alone, according to Sanford C. Bernstein & Co. analysts.

Any drug company successes at preventing, curing or slowing the progression of Alzheimer's could also have a big effect on the private long-term care insurance (LTCI) market. One securities analysts estimated in 2015, for example, that dementia might account for about 50% of LTCI claim costs at Genworth Financial Inc.

The success of BAN2401 will depend on the details of the data, set to be presented at a medical meeting, according to Bloomberg Intelligence analyst Sam Fazeli.

The dearth of good news in Alzheimer's has whetted investors' appetite for positive results. But many analysts pointed to the unknowns about the trial at this stage. The study is in phase 2, or mid-stage, and the data would need to be validated in broader testing.

"The question is, is it real?" Fazeli said. "When we see the data, will the room be filled with oohs and aahs, or will the room say, 'oh my god, not again?'"

Eisai said it will talk to regulators about how to proceed with the next step in development.

Biogen, based in Cambridge, Massachusetts, was up 21% to $362 at 9:32 a.m. in New York, after reaching $367.89, the highest intraday level since Jan. 29. Eisai shares soared by their daily limit of 19%, the most since March 2015, in Tokyo on Friday. BioArctic AB, the Swedish biotech that discovered the experimental drug, more than tripled in Stockholm.

December Failure

The result of the study, which involved more than 800 patients, was a "best case" scenario for the drug, Jefferies analysts led by Michael Yee wrote in a note. Expectations were low after the December readout didn't hit its goals, while other recent Alzheimer's studies have also disappointed, the analysts wrote.

BAN2401 targets what may be the most toxic form of beta amyloid, a protein thought to be involved in Alzheimer's. Amyloid is deposited in the brain many years before signs of disease start to emerge. The protein is probably more important in the early stages of the disease, which may explain the failure of beta amyloid-targeting drugs in trials focused on advanced disease, according to Bloomberg Intelligence.

Roche Holding AG is among the other companies still investing in compounds that target beta amyloid. Eli Lilly & Co. and AstraZeneca PLC abandoned another compound last month after the treatment failed to show any signs of working.

Analysts at Leerink Partners were skeptical about the implications of the BAN2401 data unveiled Friday for other studies targeting the beta amyloid protein.

"More disclosure, and more independent assessment of the clinical effects, such as they are, will be required before the value of BAN2401, or its contribution to the validation of beta amyloid as a therapeutic target, can be assessed," analysts including Geoffrey Porges said in a note to investors.

Leerink, which rates Biogen stock market perform, doesn't include BAN2401 in its revenue forecast for the drugmaker.

"We find no reason to believe this either prove or disproves the amyloid hypothesis," the Leerink analysts wrote.

—With assistance from Jeff Sutherland.

— Read Spotting Alzheimer's Early Could Save Americans $7.9 Trillion, on ThinkAdvisor.

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