Biogen Plunges After FDA Panel Rejects Alzheimer's Drug

Shares of Biogen plunge more than 30% after a Food and Drug Administration advisory panel voted against approving the company’s Alzheimer's disease drug.
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Shares of Biogen  (BIIB) - Get Report plunged on Monday after a Food and Drug Administration advisory panel voted against approving the company’s highly anticipated experimental Alzheimer's disease drug.

Biogen stock traded down 29.66% at $231.35 shortly after the start of trading on Monday. The stock traded at $328.90 before being halted on Friday.

The FDA's Peripheral and Central Nervous System Drugs Advisory Committee on Friday voted 8 to 1 against recommending approval of Biogen's treatment aducanumab, while two members cast "undecided" votes. Shares of Biogen were halted on Friday ahead of the panel meeting.

The panel’s conclusion was particularly surprising for investors and Wall Street analysts as it came just days after the FDA issued what was taken as a positive report on aducanumab, spurring a massive 44% rally in Biogen’s shares last Wednesday.

The FDA generally follows the recommendations of its underlying advisory panels, strongly implying that the drug won't receive the FDA’s blessing. 

Wall Street analysts were quick to share their negative views on the panel’s findings and what it means for Biogen on Monday, with Raymond James’s Steven Seedhouse calling it a “disaster” and Baird’s Brian Skorney suggesting the FDA committee panelists “skewered the company.”

Jefferies analyst Michael Yee wrote in a note to clients that the decision was “the most opposite of a panel vs FDA positive briefing book we’ve ever seen.” He is now predicting Biogen shares will fall to a range of between $220 and $250.

Stifel’s Paul Matteis wrote in his own note that the panel's decision “completely confounds things” for Biogen in that even if the drug is eventually approved, "there may be considerable backlash that politics are driving the agency’s decision-making.”

The FDA may take its time acting on the application, and the stock is likely to be volatile until the PDUFA action date in March, he added.

RBC Capital Markets analyst Brian Abrahams highlighted the longer-term impact on Biogen's overall business, noting that a key driver of near-term value “is likely gone” and “risks to existing products, rest of pipeline, and BD urgency” are now more exposed.

It was equally surprising for Biogen, which days earlier had been expecting a favorable ruling.

“We appreciated the opportunity to share our data with the Advisory Committee, and we will continue to work with the FDA as it completes its review of our application," Biogen CEO Michel Vounatsos said in a statement on Friday.