Biogen Idec Inc. (NASDAQ: BIIB) is living up to why we just said it is now an overvalued biotech stock for 2013. Biogen Idec and the other biotech giants had risen perhaps too much in 2012, and the implied risk at the end of 2012 was looking to be less than the rewards in the year ahead. Now the company is getting slapped very hard on news of a key drug test failure.
Today’s drop is due to the company’s announcement that it will halt the development of an experimental ALS treatment. The late stage study was targeting a new treatment for Lou Gehrig’s disease. The early results from an international study of 943 patients showed that dexpramipexole was not effective in patient function and survival rates. There is no cure for this disease, which affects nerve cells in the brain and in the spinal cord that ultimately control voluntary muscle movements.
Biogen Idec plans to present more detailed results from its study at a future medical conference. Unfortunately, that does not matter much to investors today.
Shares of the stock closed at $150.00 on Wednesday, against a 52-week range of $113.25 to $157.18. The stock is now down almost 6.5% at $140.30 in active trading Thursday morning. The consensus price target was above $158, but at least one analyst downgraded the stock today.
JON C. OGG