Biogen stock hammered on dismal drug results

The news cut Biogen Inc.’s market value by more than $7 billion.Associated Press/file 2015/Associated Press

Biogen Inc., the state’s biggest biotech company, said Tuesday that its first drug intended to repair nerve damage in multiple sclerosis patients failed to hit its primary goal in a mid-stage clinical trial, news that cut its market value by more than $7 billion.

The test results were a blow to the Cambridge company, which had high hopes of moving its MS research and development into a new stage where it could begin to reverse the neurological disease rather than just slow its progression. Multiple sclerosis affects about 400,000 people in the United States and 2.5 million worldwide.

The company said its experimental drug opicinumab, often called anti-LINGO, showed “evidence of a clinical effect” and was generally well tolerated by patients. But it failed to achieve the primary aim of improving physical and cognitive function and disability.

Repairing nerve damage in MS patients through a process called remyelination has been a goal of Biogen and other companies developing MS drugs for years, though Biogen was thought to have been leading the field.

“It is only through taking thoughtful, calculated risks that we can bring major advances to patients,” Biogen chief medical officer Alfred Sandrock said in a statement. “Achieving repair of the human central nervous system through remyelination would be a substantial achievement, and while we missed the primary endpoint, the . . . study results suggest evidence of a clinical effect of opicinumab.”

Sandrock said Biogen would continue to assess the results of the failed trial — involving 418 patients with relapsing forms of MS — to inform the design of its next clinical study.

Biogen tumbled almost 13 percent to $252.86 Tuesday, leaving its market capitalization at $55 billion. Biogen had been the state’s biggest company by market value; now it trails Thermo Fisher Scientific Inc., whose shares are worth $60 billion.

“While it could have been a revolutionary product, expectations were very, very low,” said Eric Schmidt, senior research analyst at the investment bank Cowen and Co., who had given the Biogen drug a 15 percent chance of success.

Schmidt said Biogen’s stock is likely to recover over time and outperform the market. “We think Biogen has a stable MS business these days, and that other pipeline programs could meet with success and could drive shares substantially higher,” he said.

Biogen, the global leader in MS treatments, currently markets a half dozen approved drugs in the United States. The latest, called Zinbryta, was approved by the Food and Drug Administration last month.

Three of the drugs — Avonex, Tysabri, and Tecfidera — are among the top-selling MS drugs in the world, each generating about $1 billion a year in revenue. All work to prevent relapses — or lengthen the time between relapses — in MS patients.

In the Phase 2 trial, opicinumab was compared with Biogen’s first MS drug, Avonex. Opicinumab, as the first drug designed to repair damage from the disease, would have created a new category in the market for MS medicines. Other drug makers have also been working on remyelination, including Vertex Pharmaceuticals Inc. in Boston and AbbVie Inc., which recently opened a neurological research center in Cambridge.

Some market watchers had been skeptical of opicinumab’s potential, but Tuesday’s clinical trial results now confirms that a “major upside opportunity [is] gone,” said Geoffrey Porges, biotech analyst for Boston health care investment bank Leerink Partners.

“We are not surprised by the study’s failure,” Porges wrote in a note to investors. “Opicinumab certainly had the potential to contribute substantial new revenue to Biogen. . . . However, the indication and the biology of this target are challenging.”