Biotech giant Biogen (BIIB) stock cratered 28% as of 9:33 a.m. ET on Thursday, after the company announced that it would be pulling the plug on its late-stage trial of its Alzheimer’s drug aducanumab.
Biogen was in partnership with a Japanese pharmaceutical company Eisai, but both companies said in a statement that they would discontinue the trial after an independent data-monitoring committee concluded that the drug would unlikely “meet their primary endpoint.”
This is a big blow to Biogen who was looking to make this drug the centerpiece of its drug pipeline. Wall Street analysts were hopeful that Biogen would be able to make progress in its attempt to treat Alzheimer’s.
However, Biogen is only one of many major drugmakers to have failed at not only attempting to create a drug to treat Alzheimer’s but also try to target the beta amyloid protein, the main component of the amyloid plaques found in the brains of Alzheimer patients.
“This was a clear part of the potential downside risk and consistent with our HOLD rating thesis. We think the base business is worth $225-$250 w/o any pipeline. However, on a trading basis, we think the stock could trade down as low as $200-$230 with the removal of the program from the valuation,” Jefferies wrote in a note to clients on Thursday. “They will have to now be overly-aggressive on M&A due to desperation.”
Citi believes that this setback will have negative ripple effects across the bigger biotech space. “With Aducanumab removed as the major pipeline catalysts, large cap biotech’s ability to grow will remain in question.”
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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