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How Bad Is Biogen's Latest Bad News?

By Keith Speights and Brian Orelli, PhD - Jun 29, 2021 at 5:04AM

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The drugmaker has had one big clinical setback and another less serious disappointment in recent weeks.

Biogen (BIIB 1.27%) received fantastic news in early June with the U.S. Food and Drug Administration (FDA) approved Aduhelm in treating Alzheimer's disease. However, the drugmaker has reported some not-so-great news in recent weeks. In this Motley Fool Live video recorded on June 16, Motley Fool contributors Keith Speights and Brian Orelli discuss just how bad Biogen's latest bad news is for the company.

Keith Speights: Speaking of Biogen, the company had bad news on two fronts this week, one was worse than the other. Biogen announced that its experimental gene therapy targeting a rare genetic retinal disease didn't meet the primary or key secondary endpoints at a phase 3 study.

Also, Biogen and its partner, Sage Therapeutics (SAGE 2.41%), ticket there is SAGE, announced what the company has counted as positive results, but those results nonetheless disappointed investors. How bad are these two news stories for Biogen?

Brian Orelli: Biogen's multiple sclerosis franchise has been on the decline so it really needs a pipeline win, and this was disappointing, twice as disappointing with two different drugs having issues. The gene therapy in the eye seems like a complete flop so I think we can just move on to the depression drugs, I think that's probably the more interesting of the two.

That drug that they're developing with Sage had mixed results. The drug worked better than placebo on day 15 but the difference wasn't all that great between the drug and placebo, although it was statistically significant. More importantly, it seemed like the peak was around day 3, and then it has declined from there until the last reading on day 15. The data that I saw only showed the difference between the drug and placebo.

My question is whether the drug is peaked at day 3 and got worse, or did the placebo just get better over time? If it's the latter, I think that's probably much better data for the drug. It's just there's a placebo effect and that we saw immediate efficacy that plateaued, went up on day 3, plateaued to day 15, that would be much better than having it peak on day 3 and go down.

This is why I avoid companies developing drugs for patient-reported outcomes. You can measure the size of the tumor, you can measure a baby's ability to sit up, or how far somebody can walk, but measuring how somebody feels is very subjective and is much more susceptible to the placebo effect, and it makes investing in those kinds of companies like ones that are developing drugs for depression much more difficult.

Speights: Yeah, Brian, I can't help but think how this news would have impacted Biogen, how the company not received FDA approval for Aduhelm. Especially the gene therapy news, this would have been a pretty bad week for the company.

Brian Orelli, PhD has no position in any of the stocks mentioned. Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Biogen. The Motley Fool has a disclosure policy.

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Biogen Inc. Stock Quote
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