Biotechnology sector-related ETFs took a blow Thursday after drugmaker Biogen (NasdaqGS: BIIB) and Eisai Co. revealed they are ending two late-stage trials for experimental Alzheimer’s therapy.
The iShares Nasdaq Biotechnology ETF (NASDAQGM: IBB), the largest biotech exchange traded fund by assets, fell 1.5% and was testing both its short- and long-term support at the 50-day and 200-day simple moving averages, respectively.
Biogen said an independent committee found the trials for the experimental Alzheimer’s drug, aducanumab, were unlikely to succeed, the Wall Street Journal reports.
The announcement sent BIIB shares plunging 29.0% Thursday, erasing about $18 billion from Biogen’s market value. BIIB makes up 7.9% of IBB’s underlying holdings. Meanwhile, over the counter market shares of Eisai Co (ESALY) plummeted 33.0%.
The findings raised further questions over the viability of the hypothesis that has informed much recent research into potential Alzheimer’s drugs. Specifically, many hypothesize that the buildup in the brain of a sticky substance called Beta amyloid is a critical factor in the disease.