Dive Brief:

An independent committee has determined that Biogen and Eisai's lead Alzheimer's drug, aducanumab, is unlikely to meet the primary endpoints of two late-stage trials, spurring the partner companies to discontinue the studies in what one Wall Street analyst termed a "transformative failure" for Biogen.

The trials were evaluating the safety and efficacy of the experimental drug in patients with mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease dementia. Aducanumab is a monoclonal antibody targeting beta-amyloid, a protein which many researchers have argued contributes to the onset and development of Alzheimer's — although that theory has met increased scrutiny as more beta-amyloid therapies have fallen short in the clinic.

Despite a significant chance of failure, Wall Street pinned the bulk of Biogen's pipeline value on aducanumab. Not surprisingly, the biotech's shares were down more than 25% in early trading Thursday, representing a loss of roughly $17 billion in Biogen's market capitalization.

Dive Insight:

The scrapped aducanumab studies aren't just a knock back for Biogen, but for the larger Alzheimer's community as well. The Food and Drug Administration has yet to approve any therapy for the underlying causes of the disease, creating an immense unmet medical need for the more than five million U.S. patients living with it.

As one of the last major candidates still progressing through Phase 3 development, Biogen's drug looked closest to filling that void. Other investigational Alzheimer's medicines from AstraZeneca, Eli Lilly, Johnson & Johnson, Merck & Co. and — most recently — Roche have made it to late-stage testing, only to have the companies stop the trials due to efficacy or safety concerns.

Aducanumab's promise, along with many of those failed drugs, hinged of what's called the amyloid hypothesis. The idea is that misfolded beta-amyloid proteins, which research suggests repair communication between nerve cells, end up congregating around the brain and forming sticky plaques that cause neurodegeneration.

Tuesday's news, however, puts further doubt in that theory.

"Aducanumab is dead, and we'd argue so is the beta-amyloid hypothesis," Mizuho analyst Salim Syed wrote in a March 21 investor note.

In addition to ending the Phase 3 ENGAGE and EMERGE trials, Biogen said it is discontinuing a Phase 2 safety study and a long-term extension investigation of the Phase 1b PRIME study of aducanumab. The biotech is evaluating whether to initiate a Phase 3 secondary prevention trial while it analyzes data from ENGAGE and EMERGE.

"This disappointing news confirms the complexity of treating Alzheimer's disease and the need to further advance knowledge in neuroscience," said CEO Michel Vounatsos in a March 21 statement.

Vounatsos added that Biogen has a history of "learning from successes and setbacks," and plans to continue working on Alzheimer's disease treatments. Whether aducanumab's failure prompts Biogen — or other Alzheimer's drug developers, for that matter — to direct R&D investment away from beta-amyloid therapies is yet to be seen.

For now, analysts don't see much value in the remainder of Biogen's pipeline.

The company does have a handful of other Alzheimer's drugs in development, yet two of the most advanced, named E2609 and BAN2401, also target amyloid aggregates or production. As such, Syed argued in his note that both compounds should be taken out of Biogen valuation models.

A weak pipeline leaves Biogen all the more vulnerable as it deals with headwinds in its portfolio too. The biotech's top-selling multiple sclerosis drug Tecfidera (dimethyl fumarate) is facing a patent challenge from Mylan at the same time that competition is quickly encroaching on one of its key growth drivers, the spinal muscular atrophy therapy Spinraza (nusinersen).

Aducanumab's failure, then, could put the rest of Biogen's business under a harsher light, removing what Piper Jaffray analyst Christopher Raymond called a "counter-weight" to competitive threats and other concerns.