A Possible Trading Opportunity Presents Itself In Biogen's Approaching Phase 3 Results

BMO says the upcoming clinical data's offer possible trading opportunity in Biogen Inc BIIB shares. The market is expecting Phase III Sola data and aducanumab titration data, both in December.

Last month, FDA granted fast track status for aducanumab, Biogen's investigational treatment for early Alzheimer's disease. Aducanumab aims to target aggregated forms of beta amyloid. Amyloid seems to be the most likely cause of the damage behind Alzheimer's disease.

BMO, citing Dennis Selkoe, a leading researcher in Alzheimer's disease, says the evidence supporting the amyloid hypothesis of Alzheimers outweighs the evidence that undercuts it. But, the expert suggested that patient selection and trial design/execution key to demonstrating benefit to support regulatory approval.

"We believe positive Phase III Sola data could provide positive read-through to aducanumab and enable BIIB shares to trade up 20-25%," analyst Ian Somaiya wrote in a note.

If the study fails, the analyst said aducanumab's ability to clear beta amyloid oligomers & plaques and a better trial design could limit downside in Biogen shares to about 10 percent.

In addition, Somaiya said Selkoe estimated that Eli Lilly and Co LLY's EXPEDITION-3 trial has about 60 percent probability of success, with Biogen's aducanumab more than 70 percent as long as rates of ARIA-E can be reduced with titration.

According to Selkoe, mild AD is characterized by cognitive decline (e.g., memory loss) whereas functional decline tends to manifest during mild to moderate AD transition.

"Biogen's use of Clinical Dementia Rating-Sum of Boxes (CDR-SB) score as its primary endpoint should enable it to capture cognitive benefit in early AD patients," Somaiya noted citing Selkoe.

Somaiya has a Market Perform rating on Biogen, with a price target of $304.