Xconomy Boston — 

Under CEO George Scangos, Biogen hasn’t been shy about taking big risks on very tough to treat diseases, even announcing plans to toss out a sure revenue stream—a group of hemophilia drugs—to increase the company’s focus. One of Biogen’s major gambles in this plan been a program meant not just to treat the symptoms of multiple sclerosis, but reverse the underlying nerve damage MS causes, which no drug has been able to do. Today that bet came up short.

Biogen (NASDAQ: BIIB) said this morning that opicinumab, an MS drug previously known as Anti-Lingo-1, failed a Phase 2 trial. Opicinumab didn’t lead to an improvement in physical function, cognitive function, or disability in MS patients, or slow the progression of the disease. And though Biogen said in a statement it has seen “evidence of a clinical effect” and will dig through the data to analyze a path forward, stockholders weren’t enthused: Biogen’s shares plummeted more than 8 percent, down to $264 apiece, in pre-market trading on Tuesday.

This study was always seen as a very risky bet, because no drug has ever been able to cause remyelination in MS patients, or cause nerves to be repaired after the haywire immune attack that chews up myelin, the nerves’ protective coating. In an earlier study in patients with acute optic neuritis—an attack on the optic nerve that is often the first acute symptom to afflict an MS patient—opicinumab produced some mixed results. Biogen deemed the data “positive” because in some patients, electric signals moved more freely through the nerve after treatment—a measure of the nerve working better. Yet patients’ eyesight didn’t improve, and their retinal nerve cells didn’t show any physical improvement either. Still, there was optimism from the company about opicinumab’s prospects.

“We’ve now demonstrated ‘proof of biology’—that we can get remyelination in man—which is something that’s never been demonstrated before,” Ex-R&D chief Doug Williams told Xconomy in early 2015 (he now runs startup Codiak Biosciences).

The big test was the following Phase 2 study, named “Synergy.” Could Biogen show a statistically significant signal in MS patients in a placebo-controlled, double-blind trial? It enrolled 418 patients with relapsing forms of MS, randomized them, and broke them into five groups. One group got a placebo over 72 weeks, and the four others got a low (3 mg/kg), medium (10 mg/kg), high (30 mg/kg), or very high (100 mg/kg) dose of opicinumab injected weekly. Biogen didn’t provide the specific details about how opicinumab performed, just that it failed to hit its marks. The full data will be presented at unspecified future medical meetings.

It’s unclear what the next steps are for opicinumab. Chief medical officer Al Sandrock said in a statement that Biogen will “continue to analyze the results to inform the design of our next study,” and the company said it has seen a “complex, unexpected dose response,” suggesting a potential path forward. But as RBC Capital Markets analyst Michael Yee wrote in a research note, Biogen didn’t specifically say it would move opicinumab into Phase 3 trials, so “there’s no obvious signs of confidence yet.”

The trial results are the latest setback for Biogen in what has already been a difficult year. Under Scangos, Biogen has by design amassed a risky pipeline, highlighted by a potential Alzheimer’s drug, aducanumab, and opicinumab. In January 2015, Biogen shares were at $475 apiece as the company was gaining steam on early positive signals for aducanumab. Shares have since eroded significantly, but Biogen has restructured and cut a number of jobs to support its risk-heavy investments, halting preclinical work in immunology and fibrosis. In May, Biogen even announced plans to spin off its hemophilia business—which includes two marketed drugs for the blood disease—into a new company. The company has in effect continued to double down on risky bets, the largest of which being the ongoing Phase 3 for aducanumab, which could swing the fortunes of Biogen wildly one way or the other.

“It is only through taking thoughtful, calculated risks that we can bring major advances to patients,” Sandrock said in a statement.

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