AbbVie crashes after new schizophrenia drug fails two trials

(Bloomberg) — AbbVie Inc. shares fell by the most in more than four years after two moderate trials of its drug to treat schizophrenia failed to meet their primary goal, a setback for the $8.7 billion U.S. The company's dollar-dollar acquisition of Cerevel Therapeutics earlier this year was .

Most read by Bloomberg

The drug emraclidine showed no statistically significant improvement on a scale used to measure the severity of mental illness symptoms, AbbVie said Monday. The company plans to analyze the data to determine next steps.

AbbVie shares fell as much as 13% as of 11:15 a.m. in New York, their biggest intraday decline since March 2020. The stock had gained 29% this year through Friday's close, outpacing the S&P 500's rise by 26%.

“This result is a real dagger for AbbVie,” Mizuho analyst Jared Holz wrote in a note, calling it “another example of the major disappointment a buyer could face when acquiring a company before crucial data is available .”

The North Chicago-based drugmaker has struck big M&A deals in recent years to expand its pipeline after declining sales of its biggest product, the anti-inflammatory drug Humira. Analysts polled by Bloomberg had predicted that emraclidine would bring in $1.1 billion in annual sales in 2029, based on benefits seen in early testing.

But the new studies announced Monday found no statistical difference between the drug and a placebo. Higher doses did not appear to be more effective, which may have given AbbVie and new Chief Executive Rob Michael, who took the helm in July, clues as to a path forward.

For AbbVie investors, “an $8.7 billion 'mistake' is likely to weigh on sentiment for some time,” wrote Piper Sandler analyst Christopher Raymond.

Bristol Surges

AbbVie's setback was seen as a victory for Bristol Myers Squibb Co., which in late September won U.S. approval for the first novel schizophrenia drug in seven decades.

Bristol shares rose as much as 13%, the most since March 2006. “Failure here will significantly strengthen Bristol's lead in the evolving market,” said Paul Matteis, an analyst at Stifel.

For decades, schizophrenia treatments focused largely on dopamine receptors. But these medications don't work for many patients. And because of unpleasant side effects like weight gain and drowsiness, fewer than half of patients continue to take their medications.

The story continues