US biotechnology giant Biogen’s shock decision to discontinue two Phase III clinical trials in Alzheimer’s disease has spooked investors, prompting declines in UK-listed pharmaceutical stocks.
Shares in AstraZeneca (AZN) have fallen 2.1% to £63.88 while GlaxoSmithKline (GSK) was broadly unmoved at £15.62 after an initial dip of 0.7%.
Over $18bn was wiped off Biogen’s market value on Thursday evening after the share price plummeted by nearly 30%.
The news unnerved UK investors by reminding them of the high risks - as well as rewards - of investing in pharmaceutical companies hoping to create the next blockbuster drug.
WHY WERE THE TRIALS DROPPED?
Biogen said it dropped the Phase III global trials in Alzheimer’s it was conducting with Eisai after independent analysis implied the trial was unlikely to meet its primary endpoint.
Alzheimer’s disease, the most common form of dementia, is a big target for pharmaceutical firms as there is no treatment and more people are expected to be diagnosed with the disease in the future.
‘Several other pharma groups have also failed with their Alzheimer developments in recent years, including AstraZeneca and Eli Lilly who stopped a global trial last summer after a panel found their treatment was unlikely to meet its goal,’ says AJ Bell investment director Russ Mould.
Mould argues that even when a drug is approved and commercialised, the successful company could be faced with competition from generic versions once the patents expire.
