Biogen stock exploded higher Wednesday — bringing shares of other Alzheimer's plays with it — after its experimental treatment succeeded in a final-phase test.
The results are sorely needed for Biogen, which has long struggled to target the neurological disease. In the Phase 3 study, the drug called lecanemab removed built-up plaque in the brain called beta amyloid. Importantly, this also led to a cognitive benefit for patients with early-stage Alzheimer's disease.
"We believe this should support a high likelihood for full approval, (Centers for Medicare and Medicaid Services) reimbursement and $8 billion in out-year worldwide end-user sales and should transform Biogen into an earnings growth story again starting in 2024," RBC Capital Markets analyst Brian Abrahams said in a note to clients.
In response, Biogen stock rocketed 39.9% to 276.61 on today's stock market. Shares of Eisai, Biogen's partner, soared 57.6% to 62.72.
The news helped boost Eli Lilly which surged 7.5% to 334.38. Roche stock also rose 6.9% to 41.75. Both companies are also testing Alzheimer's drugs that cut down on beta amyloid levels in the brain. Shares of Prothena, another Alzheimer's amyloid player, skyrocketed 87.5% to 58.
Biogen Stock: Cognitive Benefit Confirmed
In the final-phase test, lecanemab not only cleared beta amyloid plaques in the brains of Alzheimer's patients — a hallmark of the disease — but led to statistically significant benefits on cognition across the board, Biogen said in a news release.
It's the latter point that sent Biogen stock skyward. The company has already shown its drugs can cut down on amyloid. Biogen gained accelerated approval last year for Aduhelm, a similar drug. But the benefits on cognition were dubious with one successful and one failed Phase 3 test.
For lecanemab, the results were "rather clean," Mizuho Securities analyst Salim Syed said in a note. At 18 months, patients who received lecanemab showed a 27% slower decline in cognition compared with placebo recipients. This was measured by a scale known as the Clinical Dementia Rating-Sum of Boxes.
Other measures of cognition also turned up positive.
Also key for Biogen stock, just 21.3% of patients who received lecanemab experienced brain swelling known as amyloid-related imaging abnormalities, or ARIA. ARIA is a common side effect of amyloid-targeting drugs like lecanemab and Aduhelm. In the placebo group, 9.3% of patients had ARIA.
Reinvigorating The Alzheimer's Space
SVB Securities analyst Marc Goodman says the results should be clinically meaningful for patients.
"We expect that these positive results will reinvigorate the Alzheimer's disease space and increase the focus of the investor community for the two near-term anti-amyloid beta (drugs)," he said in a note. In that group, he counts Roche's gantenerumab, which should have test results in the fourth quarter. Lilly is expected to have the results of a study testing its drug, donanemab, in the first half of 2023.
Goodman has an outperform rating on Biogen stock.
Biogen partner Eisai says it plans to file for approval in the U.S. before March.
Not every analyst is a believer, though. Needham's Ami Fadia says the results are not the "slam dunk" needed to ensure Medicare authorities agree to cover lecanemab treatment. That's the step that tripped Aduhelm. CMS will pay for Aduhelm, but only for patients enrolled in the confirmatory study required in an accelerated approval.
"We believe it's still too early to say for sure that lecanemab will be a multibillion-dollar opportunity, but this likelihood is certainly higher now," she said in a note. She has a buy rating and 250 price target on Biogen stock.
Biogen Stock: A New CEO?
The lecanemab results lift a specter that has haunted Biogen stock since June 2021.
The Aduhelm controversy was so heavy, Chief Executive Michel Vounatsos announced his resignation in May. At the same time, Biogen unveiled a plan to save $500 million annually, in part eliminating the sales infrastructure for Aduhelm.
"Much of Biogen's future direction had rested on the outcome of this Phase 3 study of lecanemab in Alzheimer's disease," RBC's Abrahams said. Now that the lecanemab data are clear, SVB's Goodman expects Biogen to announce a new CEO "in the next few months."
On Wednesday, Biogen shares broke out of a flat base with a buy point at 222.92, according to MarketSmith.com. Lilly stock also edged above a flat base entry at 335.43.
Dr. Howard Fillit, chief science officer for the Alzheimer's Drug Discovery Foundation, said Biogen's results are promising, but only offer a first step in treating the disease. He notes 75% of Alzheimer's drugs in testing today target non-amyloid approaches to the disease.
"Amyloid-clearing drugs will provide an incremental benefit at best and there is still a pressing need for the next generation of drugs focused on other targets based on our knowledge of the biology of aging," he said in an emailed statement. We are optimistic about the future as many of these drugs are in development."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
