NOTES: Dementia deaths are identified according to the International Classification of Diseases, 10th Revision underlying cause-of-death codes: F03 (unspecified dementia), G30 (Alzheimer disease), F01 (vascular dementia), and G31 (other degenerative diseases of nervous system). Age-adjusted death rate per 100,000 U.S. standard population.SOURCE: National Vital Statistics System, Mortality. Age-adjusted dementia death rates for the United States, for 2017. (Image: National Vital Statistics, Mortality/CDC)

Biogen Inc. plummeted after the biotechnology giant said that its experimental Alzheimer’s drug was unlikely to be effective and that it was halting its research, in another setback for drugmakers’ efforts to find a therapy for the neurodegenerative ailment.

The Cambridge, Massachusetts-based company and partner Eisai Co. said Thursday that they would discontinue two late-stage trials designed to evaluate the efficacy and safety of the drug, aducanumab. The results showed that the drug was unlikely to help patients, the companies said in a statement. The tests didn’t reveal serious safety concerns.

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“This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience,” said Michel Vounatsos, Biogen’s chief executive officer.

Biogen is still studying other, earlier-stage compounds, and is continuing to work with Eisai on two other drugs, said David Caouette, a Biogen spokesman. Caouette declined to say whether the failure would affect a decision on whether to continue with plans for two other Alzheimer’s drugs, known as BAN2401 and elenbecestat.

Eisai declined to immediately comment.

The development will raise questions about Biogen’s future. It’s one of a handful of large biotech firms whose market value has been highly dependent on experimental drugs making it to market — and selling well once they arrive in pharmacies. But the magnitude of the blow Thursday could make Biogen vulnerable to acquisition by a bigger suitor, or force it to go shopping for a large enough asset to replenish its labs with something of similar potential.

The development is a “transformative failure for Biogen’s pipeline,” said Brian Abrahams, an analyst at RBC Capital Markets, who had the equivalent of a hold rating on the stock.

For drugmakers, expensive, ambitious attempts to find an effective treatment for Alzheimer’s have failed again and again. Drugs that looked promising in early tests have come up short when tried in larger groups, frustrating pharmaceutical executives, doctors and patients. Last year, Pfizer Inc. stopped trying entirely to find Alzheimer’s therapies, shutting down its research on both it and Parkinson’s disease and cutting about 300 jobs.

Like many others, Biogen’s aducanumab drug targeted a compound in the brain known as beta amyloid. Biogen had been developing aducanumab largely on its own until 2017, when it agreed to work with Eisai.

Eisai’s BAN2401 drug works to clear beta amyloid from the brain.

Another Eisai drug, elenbecestat, is designed to keep beta amyloid plaques from forming in the brain in the first place.

Swiss drugmaker Roche Holding AG is continuing to pursue its own drug targeting beta amyloid, persisting despite setbacks. After its candidate, gantenerumab, failed an earlier test four years ago, Roche decided to ratchet up the dose and try again with a pair of big late-stage trials. Results from the studies aren’t expected for about another two years.

Roche mostly abandoned a second beta amyloid compound this year, halting two large studies after concluding they would fail. Roche’s partner on the second compound, Alzheimer’s specialist AC Immune SA, at one point fell more than 12% in pre-market trading in New York.

Over the last three years, Biogen has spent $743 million on the research and development of aducanumab, and an additional $93 million on sales and marketing of the drug, according to a Securities and Exchange Commission filing.

Beta amyloid is a substance that can build up wax-like plaques throughout the body. The plaques are always present in the brains of people with Alzheimer’s disease, although there is some debate about whether the plaques cause dementia, make dementia worse, or are simply a symptom of the process that causes dementia.

Researchers have also been working on other strategies for preventing, controlling or curing Alzheimer’s, such as targeting another substance, tau protein, that has been associated with the disease, and examining the relationship between microbes in the body and Alzheimer’s disease.

Why This Matters to Agents

Alzheimer’s disease and other forms of dementia constitute a major threat to retirement planning clients’ finances, and to the budgets and quality of life of working-age clients who may be acting as caregivers for people with dementia.

About 5.8 million U.S. residents now live with dementia, according to the Alzheimer’s Association.

Dementia will cost Medicare and Medicaid about $195 billion this year. That amounts to 1% of U.S. gross domestic product.

—With assistance from Naomi Kresge and Bailey Lipschultz.

— Read The Impact of Cognitive Decline on Families’ Finances: RBC Surveyon ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.

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