Biogen stock jumped Friday after the Food and Drug Administration delayed its approval decision on Eli Lilly's rival Alzheimer's treatment, donanemab.
The agency was set to make a decision on donanemab this quarter. Instead, the FDA will hold a meeting of its Peripheral and Central Nervous System Drugs Advisory Committee to discuss Lilly's final-phase study. It has yet to set a date for that meeting. Lilly tested donanemab in patients with early-stage, symptomatic Alzheimer's disease.
Analysts were unsurprised by the delay. Drugs like donanemab work by removing built-up plaque in the brain known as beta amyloid. But they also cause swelling in the brain. Most of the time, this swelling is temporary and doesn't cause symptoms. Donanemab has been tied to a higher rate of this swelling than Leqembi, the approved Alzheimer's treatment from Biogen and Eisai.
"We see this as a net positive for Biogen, as it gives them more time to entrench and launch Leqembi ahead of competitive threats," RBC Capital Markets analyst Brian Abrahams said in a note. "And while we do expect donanemab will likely ultimately be approved, it also increases the likelihood that donanemab may receive a more complex label coming out of the committee."
Early Friday, Biogen stock rose 1.8% to 223.24. Eisai stock also jumped 4.4% to 10.72. Eli Lilly stock, on the other hand, slipped 2.3% to 762.14. Lilly shares are now in a profit-taking zone, about 21% extended from an early January breakout, MarketSurge.com shows.
Biogen Stock Jumps On Lilly's Delay
Dr. Howard Fillit, co-founder and chief science officer at the Alzheimer's Drug Discovery Foundation, says the FDA decision isn't a setback. Instead, it indicates the agency is doing its due diligence ahead of the approval decision.
"The decision to hold an advisory committee before granting approval follows the regulatory process that was used for the other drugs in this class, including Leqembi," he said in an emailed statement.
Notably, Lilly's final-phase study of donanemab, Trailblazer-ALZ 2, used a "goldilocks strategy" to find patients in the early stages of Alzheimer's disease and most likely to benefit from treatment. This involved using PET scans to identify patients with amyloid plaques in their brains. Investigators later followed up to confirm donanemab cleared or reduced the buildup.
Eli Lilly stock jumped almost 7% on May 3, the day the company unveiled the results of its pivotal study. Biogen stock moved a fraction higher.
"Lilly's innovative biomarker-powered trial exemplifies the importance of developing biomarkers and drugs in tandem to support drug development, trial enrollment and target engagement," the ADDF said in a its news release.
But UsAgainstAlzheimer's expressed disappointment in the FDA's move.
"As patients, we're obviously disappointed in any delay," the group said in a statement. "We know that about 2,000 people per day progress to more advanced stages of the disease, so we urge the FDA to schedule this advisory committee as soon as possible to discuss these important questions."
Alzheimer's Treatment Likely To Prevail
Piper Sandler analyst Christopher Raymond ultimately expects donanemab to gain approval, saying the approval will benefit Biogen. He has an overweight rating and 325 price target on Biogen stock.
"Given the heavy commercial lift associated with launching such a revolutionary therapy in Alzheimer's disease, it may benefit Leqembi to have another voice advocating for amyloid-targeting therapies, especially with Leqembi's marked safety advantage," he said in a report.
Despite Lilly's delay, Biogen stock remained below its 50-day moving average on Friday.
It's important to note 36.8% of patients in donanemab's pivotal study experienced brain swelling vs. just 14.9% of placebo recipients. In the study that won Leqembi's approval, 21.5% of patients experienced the side effect compared to 9.5% of placebo recipients.
Notably, three patients died in the donanemab study. There were no deaths in the placebo-controlled test of Leqembi, though three later died in the open-label study. In open-label studies, patients know they are receiving the test drug rather than a placebo. Leqembi was cited as a contributor in those deaths.
"Therefore, it is unsurprising that FDA wants to take a closer look at (donanemab's) safety before giving the green light," Raymond said.
Biogen Stock Is Tied To Its Next-Gen Shot
RBC's Abrahams, who has an outperform rating on Biogen stock, said the delay also gives Biogen time to move further ahead with its subcutaneous formulation of Leqembi. Biogen and partner Eisai plan to file for approval of their under-the-skin shot this month.
This could help further differentiate their treatment. Currently, Leqembi and donanemab are intravenous infusions which must be administered in treatment centers. Under-the-skin shots would allow patients to be treated at home. They could also possibly lower the risk of brain swelling.
Abrahams says Biogen stock investors "are not fully valuing the potential $10 billion-plus opportunity for Leqembi." He retained his 364 price target.
Piper Sandler's Raymond expects Leqembi to generate $325 million and nearly $1.4 billion in 2024 and 2025 sales, respectively.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
