Wall Street has a growing belief that US drug regulators will approve Biogen’s latest experimental Alzheimer’s treatment (BIIB) after detailed late-stage clinical trial data is released. It’s a development that may have positive implications for Eli Lilly (LLY) as the Club holding company studies a similar disease-targeting drug. Lecanemab – jointly developed by Biogen and Japanese pharmaceutical company Eisai – “moderately” slowed cognitive and functional decline in patients with early Alzheimer’s disease who took the drug compared to placebo recipients, according to a review by the New England Journal of Medicine results of the 18-month trial. Full results from the phase three trial were released on Tuesday, about two months after Biogen and Eisai published encouraging initial data from the Clarity AD study. Although there are some concerns about lecanemab’s safety, JPMorgan analysts said adverse events seen during the trial, such as brain swelling, appear “manageable”. “BIIB/Eisai have already filed the drug for expedited approval and we see the results from Clarity AD supporting full product approval,” the company wrote in a note to customers Tuesday evening. “Today’s data also bodes well for LLY’s donanemab,” the analysts added. Donanemab is the name of Eli Lilly’s drug for Alzheimer’s disease in its own late-stage trials. JPMorgan has a neutral (hold) rating on Biogen shares and an overweight (buy) rating on Eli Lilly shares. “Some debating points around the edges, but data should further reduce approval risk” for lecanemab, wrote analysts at Barclays, which has the equivalent of a hold rating on Biogen shares. Analysts also note that there are questions about the extent of lecanemab’s clinical benefit. Shares of Massachusetts-based Biogen rose more than 5% on Wednesday. Lilly shares were higher in mid-afternoon trading. What this means for Eli Lilly Eli Lilly has an ongoing phase three trial for its Alzheimer’s drug donanemab which is similar to lecanemab, so the data from Biogen-Eisai has been interpreted as favorable to holding the Club. Large-scale trial data from Eli Lilly is expected by the middle of next year. Alzheimer’s disease is a progressive disease, meaning it gets worse over time and there is no cure available. However, both experimental treatments aim to slow the progression of Alzheimer’s disease by reducing the buildup of beta-amyloid protein in the brain. This approach is known as the a-beta hypothesis. Clumps of the protein, known as amyloid plaques, are one of the main markers of Alzheimer’s disease. The other primary marker are tau tangles. The buildup of amyloid plaques and tau tangles between neurons disrupts normal brain function. This leads to the destruction of brain cells, resulting in loss of memory and thinking ability. The long-standing question among Alzheimer’s researchers has been whether reducing the presence of amyloid plaques will actually slow the rate of cognitive decline. Previous drugs developed around the a-beta hypothesis – including Eli Lilly’s – have failed to significantly delay disease progression. Biogen and Eisai also jointly developed Aduhelm, the only drug targeting beta-amyloid that has been approved by the Food and Drug Administration. However, significant concerns about its effectiveness caused the federal government’s Centers for Medicare & Medicaid Services (CMS) to severely limit the drug’s insurance coverage, causing it to fail commercially. Some believe the data from the lecanemab trials are far more compelling than Aduhelm and support the a-beta hypothesis, bolstering hopes that Eli Lilly’s latest drug may also slow disease progression. The club’s opinion Although Eli Lilly’s efforts for Alzheimer’s disease are not at the heart of our investment case, we generally believe that donanemab is a promising experimental therapy. (We’ve written about this in the past — that much of our optimism around Lilly has to do with further approval of its new type 2 diabetes drug, Mounjaro, as a treatment for obesity.) Eli Lilly is understandably trying to keep public expectations in line – after all, millions of people with Alzheimer’s and their carers want there to be a drug that works – so we can’t be sure of the results of the donanemab until we see them next year. Given a long history of failure of amyloid-targeting drugs, it’s important to keep expectations measured. At the same time, this is why we take the news around lecanemab from Biogen and Eisai with enthusiasm. This is a much-needed incremental positive development for other drugs based on the a-beta hypothesis, after the Aduhelm setback. In fact, Eli Lilly CEO Dave Ricks said key data released by Biogen and Eiasi in September “certainly boosts our confidence in donanemab.” It’s not about whether Lilly is first on the market, but rather whether these kinds of drugs can actually slow down the memory-robbing disease. (Jim Cramer’s Charitable Trust is long LLY. See here for a full stock list.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED BY YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. 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A pedestrian walks past the Biogen Inc. corporate headquarters in Cambridge, Massachusetts, Monday, June 7, 2021.
Adam Glanzman | Bloomberg | Getty Images
Wall Street has a growing belief that US drug regulators will approve Biogen’s latest experimental Alzheimer’s disease treatment (BIIB) after detailed late-stage clinical trial data is released. This is a development that may have positive implications for Eli Lily (LLY) because the Club holding company is studying a similar disease-targeting drug.
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