Biogen plunges 30 per cent after FDA rejection

Biotechnology firm’s rally proves short-lived

While the wider market surged on Monday on the preliminary analysis that Pfizer and BioNTech’s Covid-19 vaccine can prevent over 90 per cent of people from getting the coronavirus, one biotech firm moved firmly in the opposite direction.

Biogen opened the week’s trading down more than 30 per cent after a US Food and Drug Administration (FDA) advisory panel eviscerated the efficacy of the company’s experimental Alzheimer’s therapy.

The near unanimous criticism by the expert panel at the end of last week caught the market off-guard. Only last week the treatment, called aducanumab, had been praised by an FDA report.

After the regulator stated that the effect of Biogen’s therapy in one study was “robust and exceptionally persuasive,” the company’s stock surged by more than 44 per cent to a 2020 high.

With trading halted on Friday in anticipation of the advisory panel’s findings, investors have had to wait the entire weekend to react.

Reacting to the judgement, Biogen CEO Michel Vounatsos stated: “We will continue to work with the FDA as it completes its review of our application.”

With it highly uncommon for the FDA to act against the advice of its expert committee, investor sentiment has been overwhelmingly negative.

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By mid-morning Biogen traded down 31.35 per cent at $225.80, more than 22 per cent below its 2020 starting level.

A look at Biogen’s market performance in recent years demonstrates the dramatic and sudden fluctuations in price common across the biotech and pharmaceutical sector. In contrast, Pfizer and BioNTech traded up 6.7 and 11.6 per cent, respectively.

The company may well wish it had cut its losses in March 2019 when it halted its study of aducanumab on fears that the drug would not work.

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