Biogen's drug for Lou Gehrig's disease fails in study
Shares are dropping after the big biotech says it's scrapping an R&D program for ALS. But a new pill for multiple sclerosis continues to be the major catalyst for this stock.
The medicine was the in the late stages of testing for a treatment of amyotrophic lateral sclerosis, or ALS, which is also commonly known as Lou Gehrig's disease.
In morning trading, shares of Biogen dropped 4% to $144.65 (after a 6% drop in pre-market trading), though they pared their losses later in the day. The stock is still up nearly 28% over the past 12 months.
"The sentiment hit is clearly real and important for a high-flying company that really has done no wrong in years," ISI Group analyst Mark Schoenebaum says.
But Schoenebaum and other Wall Street analysts are looking ahead for a much bigger catalyst in the stock, the upcoming Food and Drug Administration approval decision on BG12, a pill for multiple sclerosis that some analysts see as a potential blockbuster product. The FDA is expected to make a decision by March 28 (though a ruling can be made before that date). BG12 would compete with Novartis' (NVS) Gilenya, the first oral treatment for MS. Biogen's drug is expected to take share from Gilenya, which was approved in 2010.
Schoenebaum previously estimated that Biogen's ALS drug would peak at around $400 million in annual sales by the end of the decade. By comparison, a consensus of analysts predicts BG12 annual sales will soar to more than twice that amount by 2014 (if the drug is approved this year).
Stifel Nicolaus analyst Joel Sendek said in a note Thursday that BG12 "has the potential to easily beat consensus estimates of $350 million and $908 million in 2013 and 2014."
Of course, the most unfortunate aspect of Biogen's ALS drug failure is that patients need a treatment. There is no cure for the disease and its cause is not understood. One of 10 ALS cases is due to a genetic defect, according to U.S. health officials. Otherwise, the causes for the condition are unknown. ALS affects five out of every 100,000 people worldwide, according to government estimates. The disease, nicknamed after the famous New York Yankee Gehrig, is often fatal within a few years of diagnosis.
Biogen says it will continue to explore the genetic causes of the disease. Dexpramipexole was Biogen's only drug candidate for ALS.
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