Biogen Stocks Surge Amidst Delay in Eli Lilly’s Alzheimer’s Treatment

Shares of Biogen (BIIB) soared on Friday following news of a setback in the approval process for Eli Lilly’s (LLY) competing Alzheimer’s treatment, donanemab.

The Food and Drug Administration (FDA) had been expected to make a decision on donanemab this quarter. However, the agency has opted to convene a meeting of its Peripheral and Central Nervous System Drugs Advisory Committee to review Lilly’s final-phase study instead. The date for this meeting has yet to be determined. Lilly conducted trials of donanemab in patients with early-stage symptomatic Alzheimer’s disease.

The delay did not come as a surprise to analysts. Drugs like donanemab, which target the removal of beta amyloid plaque in the brain, can lead to brain swelling as a side effect. While this swelling is typically temporary and symptom-free, donanemab has been associated with a higher incidence of this side effect compared to Leqembi, the Alzheimer’s treatment developed by Biogen and Eisai (ESAIY), already approved.

RBC Capital Markets analyst Brian Abrahams views the delay as a positive development for Biogen, providing the company with more time to establish and launch Leqembi before facing competitive pressures from donanemab. He also suggests that while donanemab may ultimately receive approval, the delay increases the likelihood of it receiving a more complex label following the advisory committee’s review.

In early trading on Friday, Biogen’s stock rose by 1.8% to $223.24, while Eisai’s stock also saw a 4.4% increase to $10.72. Conversely, Eli Lilly’s stock declined by 2.3% to $762.14. According to MarketSurge.com, Lilly’s shares are now in a profit-taking zone, approximately 21% above their early January breakout level.

Dr. Howard Fillit, co-founder and chief science officer at the Alzheimer’s Drug Discovery Foundation, views the FDA’s decision as a reflection of the agency’s thorough review process rather than a setback. He notes that the advisory committee meeting aligns with the regulatory process used for similar drugs, including Leqembi.

Lilly’s final-phase study of donanemab, Trailblazer-ALZ 2, employed a “goldilocks strategy” to identify patients in the early stages of Alzheimer’s disease most likely to benefit from treatment. By utilizing PET scans to identify patients with amyloid plaques in their brains, researchers were able to confirm the effectiveness of donanemab in clearing or reducing plaque buildup.

Despite the delay, analysts remain optimistic about the eventual approval of donanemab and its potential benefits for Biogen. Christopher Raymond, an analyst at Piper Sandler, anticipates that donanemab’s approval will ultimately bolster Biogen’s position in the market. He maintains an overweight rating on Biogen stock with a price target of $325.

While the delay may pose challenges for Biogen, particularly as its stock remains below its 50-day moving average, there is optimism regarding the long-term potential of Leqembi and the upcoming submission of its subcutaneous formulation for approval.

In conclusion, despite the setbacks and delays, both Biogen and Eli Lilly remain key players in the race to develop effective treatments for Alzheimer’s disease.