Medivation loses about two-thirds of value on negative study results for Alzheimer’s drug

Medivation tumbles on Dimebon trial failure

NEW YORK — Shares of Medivation Inc. plunged Wednesday after the failure of Dimebon, an Alzheimer’s drug the company is developing with Pfizer Inc.

Medivation stock lost about two-thirds of its value and fell to an annual low Wednesday morning. Before the market opened, Medivation and Pfizer said data from a late-stage trial showed Dimebon was no better than a placebo at improving symptoms of Alzheimer’s, including mental abilities and overall function.

In midday trading, shares of the San Francisco biotechnology company sank $26.94, or 66.9 percent, to $13.31, making them the biggest decliner on the Nasdaq. Earlier the stock reached $12.55, its lowest point since December 2008.

Pfizer shares shed 19 cents to $17.41.

Medivation and New York-based Pfizer teamed up to codevelop Dimebon in late 2008, and some analysts saw the drug as a top earner for Pfizer in the future. Medivation stands to receive hundreds of millions in milestone payments along with royalties on sales if the drug is approved. Dimebon is being tested as a treatment for both mild to moderate and moderate to severe Alzheimer’s disease, along with Huntington’s disease.

Rodman & Renshaw analyst Elemer Piros downgraded Medivation shares on the news, cutting his rating to “Market Perform” from “Market Outperform.” He said it looks like Dimebon will not work against Alzheimer’s or Huntington’s.

“The companies should stop any further development activity for the drug, in our view,” he wrote. Piros said Medivation shares are worth about $16 based on the company’s other potential drugs.

Four other late-stage trials of Dimebon are currently under way. BMO Capital Markets analyst Robert Hazlett said the drug appeared effective in midstage studies, but he is now skeptical the drug will reach the market. He cut his 2016 revenue estimate for Pfizer by almost $1 billion.

“This initial Phase 3 failure casts large doubt on the drug’s prospects,” he wrote.