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Biogen draws favorable attention following success of Phase 2 Alzheimer's disease study

Investors are taking profits after Biogen shares spiked on the promise of a mid-stage study for BAN2401, its key treatment for Alzheimer's disease

Alzheimer's patient
Analysts are rushing to raise price targets on Biogen

Investors in Biogen Inc (NASDAQ:BIIB)  took the opportunity to engage in profit-taking today in the wake of the success of a mid-stage study for BAN2401, the biotech's key experimental drug for Alzheimer’s disease.

Biogen and its Japanese partner Esai are earning considerable plaudits for winning a rare victory in the challenging area of Alzheimer’s disease, with their announcement of promising results of a Phase 2 study.

And in the last week, Biogen shares have climbed as much as 21% to rise above the key threshold of US$350, prompting investors to sell shares today and push the stock down nearly 2% to US$351.50 in midday trade.

Research analysts enthusiastic about Biogen's outlook

Equally enthused by the potential of the Alzheimer’s drug, analysts are rushing to update their price targets on Biogen.

Keeping an Outperform rating on the stock, Oppenheimer’s Jay Olson also pushed up his stock price target to US$400 from US$375 on the view that there is still upside in the company’s share price.

“We believe Biogen shares are undervalued based on our view that the company’s leadership position in neuroscience should deliver long-term growth,” he wrote in a note to investors.

“A business supporting high-risk, high-reward studies puts Biogen in the lead to develop a potentially disease-modifying Alzheimer’s disease drug,” Olson added.

Michael Yee of Jefferies echoed Olson’s sentiments and also bumped up Biogen’s price target to US$400 from his previous estimate of US$300 while keeping a Hold on the stock. The lingering questions for Yee are about the sufficiency of incoming cash flow to support Biogen’s research as well as any further details about the risks and rewards of the data for BAN-2401, according to his research note, which was reported by TheFly.com.

The science in detail

Taking a close look at the Phase 2 study, patients with early cases of Alzheimer’s who received the highest dose (10mg) of BAN2401 saw less of an erosion in their cognitive faculties after 18 months of treatment compared with those who took a placebo. The treatment reduced the build-up of toxic plaque in the brain and improved cognition, according to Biogen.

What BAN2401 has succeeded in making the case for is that by targeting amyloid beta proteins, the effects of Alzheimer’s disease can be greatly diminished.

BAN2401 holds so much potential as it manages to break down and reduce the amount of toxic beta amyloid plaque in the brain, which destroys the memories of patients with Alzheimer’s.

This optimistic update for BAN-2401 represents a tremendous coup as the failure rate for devising treatments for Alzheimer’s is more than 99%.

“This is the first late-stage antiamyloid antibody study to successfully achieve statistically significant results at 18 months, further validating the amyloid hypothesis,” said Dr. Lynn Kramer, chief medical officer in Eisai’s Neurology group. “We will discuss these very encouraging results with regulatory authorities to determine the best path forward.”

Detailed results of the study will be presented at future medical conferences, but the two companies haven’t yet offered specifics on the roll-out of Phase 3 trials.

“I look forward to seeing the full data set shared with the broader Alzheimer’s community as we advance against this devastating disease,” said Dr. Jeff Cummings, founding director of the Cleveland Clinic's Lou Ruvo Center for Brain Health.

Biogen and Eisai did say they intend to engage in discussions with regulators about the next stages of clinical trial work required to bring the drug to market.

Last December, BAN2401, which was tested in a study analyzing 856 patients, failed to meet its first benchmark of performing better than a placebo at 12 months of treatment. But Biogen and Eisai continued with the trial and found that BAN2401 showed considerable promise after 18 months of treatment.

A domino effect should boost the success of Biogen's other Alzheimer's drug 

Biogen also boasts another drug in its stable of offerings, targeting Alzheimer’s disease known as Aducanumab, which is currently in Phase 3 trials.

Analysts expect that something of a contagion effect will take place and BAN2401’s success improves projections for Aducanumab as well.

“We view the BAN2401 outcome as positive, especially for aducanumab, which we still see as the lead Alzheimer’s disease asset for which we model US$3.6bln risk-adjusted revenues,” concludes Oppenheimer’s Olson.

The leading form of dementia, more than 5mln people are currently living with Alzheimer’s disease and barring a medical breakthrough, that number is set to reach 14 million, according to the Alzheimer’s Association.

Quick facts: Biogen Inc

Price: 326.96 USD

Market: NASDAQ
Market Cap: $56.93 billion

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