Shares of Biogen Inc. blasted off Tuesday toward a record one-day gain, after the biotechnology company surprised investors by saying its Alzheimer’s treatment was ready to start the regulatory approval process, and following third-quarter earnings that rose well-above expectations.
The company BIIB, +30.32% and its Japan-based partner Eisai Co. Ltd. ESALY, +38.83% 4523, -0.29% said its decision to pursue approval of aducanumab, an treatment for early Alzheimer’s diseases was made after the drug met the primary endpoint of a Phase 3 Emerge study, and after consulting with the U.S. Food and Drug Administration.
Biogen said results from a Phase 3 Engage study of a subset of patients did not meet its primary endpoint, but supported the findings from the Emerge study.
Biogen’s stock rocketed 29.1% on heavy volume in afternoon trading Tuesday. That puts it on track for the biggest one-day percentage gain since the company went public in September 1991, besting the previous record of 27.5% on April 20, 1999.
Trading volume swelled to 16.5 million shares, compared with the full-day average of about 1.8 million shares. The stock’s price gain of $64.96 has boosted Biogen’s market capitalization by $12.0 billion to $53.2 billion.
The upbeat trial results comes seven months after Biogen’s stock plummeted, falling 29.2% on March 21, after Biogen and Eisai said it had decided to discontinue Phase 3 Emerge and Engage trials of aducanumab, after a futility analysis indicated the trials were unlikely to meet their primary endpoints.
Despite Tuesday’s rally, the stock was still below where it was–$320.59–just prior to the news that the trials would be discontinued.
Biogen said Tuesday that a new “extensive analysis” of additional data from a larger dataset showed a “different outcome than the outcome predicted by the futility analysis.” The company then consulted with the FDA on the different results and implications.
“This large dataset represents the first time a Phase 3 study has demonstrated that clearance of aggregated amyloid beta can reduce the clinical decline of Alzheimer’s disease, providing new hope for the medical community, the patients, and their families,” said Anton Porsteinsson, a director at the University of Rochester Alzheimer’s Disease Care, Research and Education Program and principal investigator. “There is tremendous unmet medical need, and the Alzheimer’s disease community has been waiting for this moment.”
Biogen plans to file a Biologics License Application (BLA) for aducanumab in early 2020.
Analyst Yatin Suneja at Guggenheim said in a research note titled, “Just in Time for Halloween, Aducanumab Has Risen from the Dead,” that he believes aducanumab, if approved, “has the potential to completely change the profile of the company.”
He said he expects the stock could “re-rate” and return to its trading range of $300 to $360 before the futility analysis results announced in March, at least until the FDA’s decision on the BLA. Suneja has been neutral on Biogen’s stock since February, and currently has a $256 stock price target.
Mizuho’s Salim Syed kept his rating at neutral, saying that while the aducanumab news “sounds” positive, FDA approval is not guaranteed as questions remain.
Syed remains skeptical given that two similar studies, Emerge and Engage, had different results.
“BIIB is pretty explicit even in its slides this morning that EMERGE (the trial that worked) and ENGAGE (that trial that failed, but seemed to work in the high dose) are identically designed studies,” Syed wrote in a note to clients. “So the question here is why would two identically designed studies have disparate results.”
Adding to investor optimism, Biogen also reported a big earnings beat, citing a solid performance from its multiple sclerosis (MS) treatments and a strong growth in its spinal muscular atrophy (SMA) drug Spinraza.
Net income increased to $1.55 billion, or $8.39 a share, from $1.44 billion, or $7.15 a share, in the year-ago period. Excluding non-recurring items, such as acquisition- and divestiture-related costs, adjusted earnings per share rose to $9.17 from $7.40, above the FactSet consensus of $8.28.
Revenue grew 5% to $3.60 billion, above the FactSet consensus of $3.54 billion. Revenue from Biogen’s best selling drug, MS treatment Tecfidera, grew 3% to $1.12 billion to match the FactSet consensus, while Spinraza revenue jumped 17% to $547 million to beat expectations of $488 million.
“In addition to the recent news on aducanumab, we made strong progress in our pipeline as we initiated new clinical programs targeting Parkinson’s disease and brain contusion, and we look forward to nine important data readouts by the end of next year,” said Chief Executive Michel Vounatsos. “We continue to believe that our core focus on neuroscience will lead to new innovative treatments for patients and will maximize long-term returns for our shareholders.”