November 5, 2015
By Mark Terry, BioSpace.com Breaking News Staff
On Oct. 21, 2015, Biogen released its third-quarter financials which included $2.8 billion in revenues, an 11 percent increase compared to the third quarter in 2014, and corporate restructuring, which included an 11 percent cut in workforce and slashing several pipeline programs.
As The Motley Fool points out, that sort of thing tends to indicate a company in trouble, but the stock market responded with an increase of 4 percent for Biogen shares. The questions is, why?
Biogen is a company with a great deal of ambition in some very high-risk areas, such as multiple sclerosis and Alzheimer’s disease. One of the programs the company is killing is a Phase III trial of Tecfidera for secondary progressive multiple sclerosis (SPMS). There has been some concern over Tecfidera related to the development of a very rare side effect called progressive multifocal leukoencephalopathy (PML) in a couple patients that resulted in death. The connection between the drug and the fatalities appear to be somewhat tenuous and exceedingly rare, but that’s enough to cause issues with stock prices.
Regardless, sales of Tecfidera have slowed. Biogen had ramped up its headcount in a response to the initial sales growth of the drug from 5,000 to about 8,000, and sales expectations have been redrawn from about 15 percent to about 8 to 9 percent. This is a part of the job cuts.
The Phase III trial for Tecfidera in SPMS, which had started recruitment in the summer, would have involved 1,170 SPMS patients worldwide. Although Biogen didn’t report its projected expenses for the trial, analysts suggest a trial of that size could run $1 billion or more. If the market is big or the odds are particularly good, it’s a justifiable gamble. The Motley Fool points out that “SPMS is a tough nut to crack. These are patients whose disease began as relapsing remitting MS and then began resembling primary progressive MS.” There’s not a lot of approved treatment options at this point, although there’s been a number of attempts, but Biogen is probably correct in believing that the odds don’t support the investment.
One area — where the odds may be just as long as with Tecfidera and SPMS — but where the reward would be far greater, is the Alzheimer’s market. And Biogen appears to be doubling down on this area with its Alzheimer’s candidate aducanumab. In a Phase IIb clinical trial, the drug showed a significant decrease in amyloid plaque in AD patients, one of the underlying causes of AD.
Alzheimer’s drug research is a wasteland of failed trials, with approximately 123 drugs having failed in clinical trials. Biogen has started enrollment in two identical Phase III trials with aducanumab, and will have a total combined 2,700 patients. Data collection is expected to run through 2020, with the study completed in 2022. Again, these are enormously expensive trials that could exceed, according to analysts, $1 billion.
On the other hand, the Alzheimer’s Association indicates that spending on AD and other dementias costs the U.S. about $225 billion each year. Some analysts have predicted that any even moderately effective AD drug could bring in $3 billion in annual sales worldwide.
Biogen also plans to start a Phase III clinical trial of a drug for a number of autoimmune diseases. It recently acquired the drug, MT-1303, which is an S1P modulator, in the same class of drug as Novartis’s Gilenya and Celgene’s Ozanimod. MT-1303 appears to have fewer side effects than other drugs in its class and is expected to be studied next year in a Phase III trial in inflammatory bowel disease.
The company also has another multiple sclerosis candidate, Anti-LINGO. Not only does it appear to slow the progression of MS, but may actually reverse the damage. That’s all potential at the moment, but intriguing, nonetheless.
“The decision to reduce the Company’s workforce was extremely difficult, but we believe these actions are necessary to fulfill our mission of bringing important new medicines to patients,” said George Scangos, Biogen’s chief executive officer in a statement at its third-quarter report. “We have several high-quality programs that are now or soon will be in Phase III, and the cost savings from the restructuring will be reinvested to carry out those programs aggressively and hopefully to bring them to patients as quickly as possible.”