Picking Up the Pieces: How Biogen Is Dealing With Discontinued Alzheimer’s Trial

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A Biogen Inc. (NASDAQ: BIIB) filing with the Securities and Exchange Commission (SEC) indicates that it intends to buy back a sizable amount of stock. This comes after the biotech giant lost roughly one-third of its market cap following a discontinued Alzheimer’s disease trial.

In the 8-K form filed, Biogen said that it has authorized a repurchase of up to $5.0 billion of the company’s common stock. This authorization does not have an expiration date. It is in addition to the previous repurchase authorization enacted in August 2018 with $1.7 billion remaining.

As of Friday’s close, Biogen had a market cap of roughly $42.6 billion. The current buyback plan makes up about 11% of this market cap. Prior to the announcement regarding the Alzheimer’s disease trial, Biogen had a market cap of roughly $63 billion.

Excluding Monday’s move, the stock was actually down 32.4% from last Wednesday’s close. Overall, the stock was down about 28% year to date.

Biogen announced last Thursday that it is discontinuing its global Phase 3 trials, Engage and Emerge, designed to evaluate the efficacy and safety of aducanumab in patients with mild cognitive impairment due to Alzheimer’s disease and mild Alzheimer’s disease dementia.

Ultimately, the decision to stop the trials is based on results of a futility analysis conducted by an independent data monitoring committee, which indicated the trials were unlikely to meet their primary endpoint upon completion. The recommendation to stop the studies was not based on safety concerns.

As part of this decision, the Evolve Phase 2 safety study and the long-term extension of the Prime Phase 1b study of aducanumab also will be discontinued. Initiation of the aducanumab Phase 3 secondary prevention trial will be assessed while the data from Engage and Emerge are further evaluated.

Shares of Biogen closed Friday at $216.71, in a 52-week range of $216.49 to $388.67. The consensus price target is $380.14. Following the filing, the stock was up about 1.6% at $220.25 in early trading indications Monday.

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