Wall Street analysts expect Eli Lilly’s new, positive Alzheimer’s disease data to be a double-edged sword for one of the company’s main rivals, Biogen.
On Wednesday, Lilly reported that its closely watched experimental drug donanemab succeeded in a large clinical trial of more than 1,700 Alzheimer’s patients. The drug hit all of the study’s key goals — including the main one, which focused on cognition and how well patients perform daily activities like driving, managing finances and discussing current events.
After a year and a half of treatment, researchers found patients given Lilly’s drug declined 35% slower than those on placebo. Additionally, at one year, just under half of those on donanemab showed no decline on a prominent scale used by Alzheimer’s researchers to evaluate the severity of the disease. The result was significantly better than the placebo group, wherein 29% of participants had no decline on that scale, which is known in short as CDR-SB.
Lilly’s stock price rose more than 5% Wednesday morning, to trade at roughly $426 per share. Biogen shares, meanwhile, were down before the market’s open, but reversed course by mid-morning to trade up about 1%.
To analysts, the mixed reaction from Biogen investors is understandable. The company has two approved Alzheimer’s medicines, with the more recent one, Leqembi, supported by data from a key clinical trial in which it slowed the progression of Alzheimer’s by 27%. Though the Leqembi and donanemab studies have important differences, analysts acknowledged that the fresh data could lead some to think of Lilly’s drug as more effective.
“Again, we want to caution here that [Lilly] may have simply run a better trial,” wrote Stifel analyst Paul Matteis in a note to clients, “but at face, donanemab's efficacy looks great and may be perceived as better by a number of” important doctors and researchers.
Yet, Lilly’s results could also end up helping Biogen.
Both Leqembi and donanemab are designed to target amyloid beta, a protein that has been at the heart of Alzheimer’s drug research for decades. The “amyloid hypothesis,” as it is known, revolves around the idea that when this protein misfolds, it clumps together to form sticky aggregates that impair brain cell function.
Many amyloid-busting therapies have been developed over the years, but almost all have failed in key studies, raising doubts about the validity of the amyloid hypothesis and whether resources would be better spent on other approaches.
Biogen’s Aduhelm was the first to gain approval from the Food and Drug Administration back in 2021, but the complex and controversial data supporting the medicine have hindered it commercially. Now, much of the company’s near-term growth hinges on Aduhelm’s successor, Leqembi, which was recently given a conditional clearance based on its effects on amyloid.
Analysts expect Lilly’s results, combined with the earlier data backing Leqembi, will help to affirm the amyloid hypothesis and create a stronger case for insurance coverage. “Bottom line: the two together mean more uptake and reimbursement,” wrote Michael Yee, an analyst at the investment bank Jefferies, in a note to clients Wednesday.
So far, sales of amyloid-targeting Alzheimer’s drugs like Aduhelm and Leqembi have been minimal, in large part because of a highly restrictive policy enacted by the Centers for Medicare and Medicaid Services. However, the agency, which covers the bulk of patients eligible for these therapies, is expected in the next few months to change its policy and broaden access.
With the positive data in hand, Lilly said it’s now working as quickly as possible to get donanemab approved around the world. The company plans to submit a marketing application to the FDA by the end of June, and present full results from its study at the Alzheimer's Association International Conference in July.
In the meantime, Wall Street will likely continue debating the market potential of donanemab and Leqembi.
With donanemab, analysts note how the drug appears quite effective and could be seen as more convenient to patients, given that it’s administered a finite number of times rather than chronically.
Yet, it also comes with safety concerns. Lilly’s study found that 24% of patients treated with donanemab experienced a kind of brain swelling known as ARIA-E, and 31% had tiny brain bleeds known as ARIA-H. These figures are about two times higher than what was seen in the study that led to Leqembi’s approval.
Lilly also said two patients in its study died due to these side effects, while a third died after a serious case of ARIA. The company said the majority of ARIA cases were mild to moderate and resolved or stabilized with appropriate management. The incidence of serious ARIA was 1.6%.
“Our view here is that as use of anti-[amyloid] antibodies expand … into the broader neurology community, safety may represent a key driver of utilization,” wrote Stifel’s Matteis, adding that this trend has been seen in other neurological diseases, including epilepsy, multiple sclerosis and Parkinson’s disease.
The Stifel team estimates that Leqembi, even with competition from donanemab, could achieve around $10 billion in annual sales at its peak.