What happened

Shares of the top biotech company Biogen (NASDAQ:BIIB) fell by as much as 12% today on higher than normal volume for the stock.

Biogen's dramatic slide today was sparked by yesterday's midstage trial data release for the Alzheimer's disease drug candidate BAN2401. Biogen is co-developing this drug with Japan's Eiasi (NASDAQOTH:ESALF). The nuts and bolts version of the story is that the drug's potential clinical benefit in terms of cognitive decline may be due to nothing less than an imbalance in the study's design.

A medical report with the words Alzheimers Disease written on top.

Image source: Getty Images.

So what

Specifically, Biogen and Eisai reported that patients in the high dose arm of the study exhibited a slower cognitive decline than those who received a placebo. The catch, however, is that a far greater percentage of patients in the placebo arm were genetically predisposed to rapid disease progression, compared to the high dose wing of the study. The drug's potential clinical benefit therefore can't be easily extrapolated from this data.

Now what

Investors were apparently hoping that BAN2401's midstage data would be clean enough to warrant an accelerated filing. After all, Alzheimer's disease is an area of high unmet medical need, and even a hint of efficacy in an experimental drug might be enough to convince regulators to green light a drug on a conditional basis.

This mixed bag, however, suggests that Biogen and Eisai will need to conduct a larger late-stage trial prior to seeking approval in either the U.S. or the EU. Unfortunately, this drug belongs to a class of medicines that has repeatedly failed to show any clinical benefit for Alzheimer's patients in late-stage trials.