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Biogen is after one key thing: the perfect dose.
Highly anticipated data due out next week on its experimental Alzheimer's medicine could show whether aducanumab will be among the first drugs to slow the cognitive declines associated with the disease.
If the medicine continues to perform the way the data have suggested so far, the impact would be enormous: Alzheimer's affects more than 5 million Americans now—a number expected to triple by 2050 without interventions. Analysts say the drug has a potential market opportunity of $20 billion a year.
On Wednesday, at the Alzheimer's Association International Conference in Washington, D.C., the company will present the results of what some hope may be the Goldilocks dose: highly effective, without too many side effects.
The data Biogen presented in March electrified the stock, sending shares up 11 percent. The results showed that after about a year, the medicine improved cognition compared with placebo, with the effects getting stronger as the dose increased. Biogen presented results at one year for doses of 1, 3 and 10 milligrams per kilogram.
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The problem: The 10 milligram dose, while showing the highest efficacy, also came with a troubling side effect. Known as ARIA, or amyloid-related imaging abnormalities, it's associated with removal of the amyloid plaques in the brain that are hallmarks of Alzheimer's and can result in brain swelling.
So Biogen has also been testing a fourth dose, of 6 milligrams. At the March presentation, results were only available on that dose through about six months. Wednesday will show the data out to one year.
"The key question is: Does the 6mg/kg look more similar to the 10mg/kg, which demonstrated profound benefit (but was toxic) or does it look more like the 3mg/kg dose, which was modestly effective," said Nomura analyst Ian Somaiya.
In other words: Will it be Biogen's Goldilocks dose?
The answer could be meaningful not just for medicine, but also for the stock: Somaiya estimates Biogen will trade down 5 percent if the 6 milligram efficacy looks similar to the 3 milligram, but could trade up more than 20 percent if it looks like the 10 milligram. If it falls in between, as he says most people expect, he estimates the shares could gain 5 to 7 percent.
Further heightening the drama: At the six-month mark, the 6 milligram dose looked most like the placebo group, where patients were getting nothing at all. Analysts expect it to differentiate in the one-year update, but Somaiya says if it continues to look like the placebo, Biogen's stock could drop 15 to 20 percent.
There's another reason the 6 milligram dose is so important. The data on the other doses lined up just as one would expect for a drug that's working—known as a dose-dependent response, the effects were greater the higher the dose. It's important for the 6 milligram dose to fit into that pattern, or it could cast doubt on whether the drug actually works, analysts say.
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"Should the 6 mg dose show meaningful efficacy at 52 weeks, especially should the 6 mg dose cohort line up in between 3 mg and 10 mg, it would be very difficult to argue that the cognitive benefits of aducanumab are not real," Cowen analyst Eric Schmidt wrote in a July 10 research note. "On the other hand, should the 6 mg cohort fail to differentiate itself vs. placebo, it would throw into doubt the dose responsiveness of aducanumab observed thus far, which we view as the drug's most compelling efficacy signal."
Schmidt estimates Biogen's shares may trade up or down $50 on the news. With the shares trading Friday at about $404, a $50 move represents more than $10 billion in Biogen market value.
The stock has increased about 30 percent since the company originally surprised investors in December by saying the drug appeared to be working in an early-stage trial. The shares peaked on the March announcement, and have pulled back about 6 percent since then. JPMorgan analyst Cory Kasimov says the options market is factoring in an 8 percent move in either direction by the end of next week.
Analysts say there are reasons to be optimistic, especially since Biogen has already made plans to move forward with large late-stage studies of the medicine. The Alzheimer's conference, which kicks off this weekend, will also bring data on a competing drug from Eli Lilly. If it or Biogen's is successful, they could be the first on the market to make an impact on the memory loss that Alzheimer's brings.
The drugs are being tested on patients with the earliest forms of Alzheimer's, so wouldn't be a panacea for the millions of patients with the disease today. But they could be a significant step forward in a massive disease with no effective treatment options.