Updated from 9:20 a.m. EST
Shares of Biogen (BIIB) and Ionis Pharmaceuticals (IONS) were trading higher Monday morning after the companies said their Phase 3 trial of Spinraza, an investigational treatment for spinal muscular atrophy, met its primary endpoint.
Children who received the treatment saw a "highly statistically significant improvement in motor function compared to those who did not receive treatment," the companies said in a statement.
Kids on Spinraza improved by an average of 4.0 points while children on a placebo declined by an average of 1.9 points, as measured by the Hammersmith Functional Motor Scale Expanded (HFMSE). Any change of 3.0 points or greater is considered clinically meaningful.
"The high statistical significance is remarkable to us and reflects the clear benefit of the drug across the population (rather than a spread or range of benefits with wider standard deviation)," RBC Capital analysts wrote in a note this morning.
The firm added that Biogen's stock price doesn't reflect much pipeline, and data such as this "helps drive upside to consensus numbers, re-invigorates enthusiasm that these biotech drugs can work, that innovation is still alive, and investors can make money."
Leerink is similarly bullish, and upgraded Biogen shares to "outperform" from "market perform" following the trial's positive outcome. The firm raised the probability of the treatment's success to 100% from 80%, increased its long-term revenue forecast between 1% and 2% and boosted its earnings estimates between 1% and 3%.
"We believe Biogen offers substantial leverage to an emerging but still risky outlook for breakthrough treatments for Alzheimer's disease, a solid but eroding [multiple sclerosis] franchise and now one of the few really compelling new product launch opportunities for 2017," Leerink analysts said.
Biogen is preparing to launch Spinraza as early as the end of 2016. The FDA accepted a New Drug Application for the treatment in October.
Biogen stock was up 7% in late-morning trade while Ionis shares were surging nearly 20%.