Trust favourite Biogen hit by AD trial rejig

Trust favourite Biogen hit by AD trial rejig – Shares in Biogen, the neurology-focused US biotech giant and a key holding for many of the sector specialist investment trusts, fell by more than 6% yesterday on heightened concerns over a decision to expand patient enrolment  in its two large Phase III trials of aducanumab for Alzheimer’s Disease (AD). The decision to add some 250 extra patients to each trial was prompted by having seen greater patient “variability” in blinded data, but equally it may mean the drug’s effect is smaller and therefore increases concerns about whether the studies of the beta amyloid antibody will be able to demonstrate efficacy.

These concerns were further heightened by news that emerged earlier in the day that Merck & Co’s only remaining phase III trial in AD with verubecast, a compound with a related mechanism to aducanumab, had failed. Biogen has an interest in a compound with the exact same mechanism as verubecastat, a beta-amyloid convertine enzyme-1 (BACE) inhibitor, in addition to aducanumab.

The context for these news items is that a drug with for Alzheimer’s with a disease modifying mechanism – realistically one that slows the condition’s development – is considered to be the “Holy Grail” in drug development. Financially, if successful such a drug would almost certainly become the most valuable in the history of the industry, given the complete lack of any such molecules today and the large and growing numbers of people affected by AD. However, Alzheimer’s has also proven uniquely intractable to drug development, with many failures, and there are increasing scientific concerns around the so-called “amyloid hypothesis” on which almost all of the industry’s current development programmes depend.

Moreover, it is becoming increasingly expensive to conduct the regulatory studies required to show efficacy, as these need large numbers of AD patients to be monitored over long periods of time. Costs have increased as the prevailing trend has been to try to intervene earlier in the course of the disease, in some cases before even symptoms have become evident. It is widely thought that the failures of the industry’s past efforts have been because interventions have been made too late. Finally, such are the costs – and the necessary assumption of low probabilities of success – with AD, that even the largest pharmaceutical companies have often formed partnerships with one-another to spread risk. As such, Biogen’s go-it-alone strategy with aducanumab is considered to be one of the largest ever single “bets” in the history of the pharmaceutical industry.

Biogen is the leading player in AD and although it has a wider business in other CNS areas and in multiple sclerosis, it would usually be held by investors for this reason. Biotech Growth Trust (BIOG) has the largest over-weight position among the 13 sector specialist trusts monitored by Marten & Co, with a holding accounting for 12.5% of its NAV. Biogen is also a top holding for two US closed end funds, Tekla Life Science (8.2%) and Tekla Healthcare Investors (8.2%) and for the UK-listed International Biotech Trust (IBT) (6.5%). However, some funds, such as BB Biotech, have chosen to have no exposure, where it might otherwise be expected – Biogen being the third largest component of the Nasdaq Biotech Index (NBI), with a 7.7% weighting.

Biogen’s late-stage programmes in AD are shown in the table below (note the BAN2401 and BIIB092 studies are both Phase II).

Trust favourite Biogen hit by AD trial rejig