Alzheimer's Drug Raises Hopes, Costs --- Results of Biogen's treatment breathe new life into anti-amyloid drugs that were partially written off

"The Alzheimer's drug data released Tuesday night aren't going to be transformative only for Biogen, which is struggling to get love from investors after its botched launch of Aduhelm.

The results are breathing new life into a class of anti-amyloid drugs that was partially written off, increasing investor confidence that drugs from Eli Lilly and Roche Holding could deliver positive results.

Biogen's results sent its shares up 40% Wednesday, adding more than $10 billion to its market cap. Eli Lilly traded 7.4% higher while Roche's U.S. traded shares were up 4.1%, adding more than $30 billion to the combined market value of the two pharmaceutical companies and reflecting the potential competition a Biogen therapy (together with Japanese partner Eisai) could face.

The reversal in investor sentiment is nothing short of massive.

After so many drugs targeting amyloids had failed in clinical trials in recent years, there was growing skepticism of the "amyloid hypothesis," the idea that targeting a buildup of the protein in patients' brains should slow dementia.

The results released Tuesday were unequivocal though. The drug reduced cognitive and functional decline by 27%, compared with a placebo. The data, which haven't yet been published in a peer-reviewed medical journal, hit all of the trial's primary and secondary endpoints, with many analysts calling it a best-case scenario. Importantly, while the drug did show safety concerns such as brain swelling, it looked safer than other candidates now making their way through clinical trials, wrote Michael Yee of Jefferies. Results for late-stage trials of Roche's gantenerumab and Eli Lilly's donanemab are expected within the next year, and investors re-evaluated their probability of success. Lilly investors can justifiably raise the chances of success from 30% to 40% to closer to the 70%-to-75% range on peak annual sales of $8 billion-$10 billion, wrote Seamus Fernandez of Guggenheim. That justifies a 5%-to-7% increase in its stock price, Mr. Fernandez wrote before the market opened on Wednesday. "Net-net, what's good for the goose is good for the gander," Mr. Fernandez said.

The positive data make it likely that the Food and Drug Administration will grant Biogen accelerated approval in January, with full approval coming later next year. The bigger question for investors, patients and society is what the Centers for Medicare and Medicaid Services will do. Biogen's last approved drug for the disease, Aduhelm, received the FDA nod, but CMS effectively killed its commercial prospects by restricting it due to lack of meaningful improvement in health outcomes.

This time will be different, with CMS unlikely to "dig in and refuse coverage" due to the highly successful clinical data, wrote Brian Skorney at Baird. With about two million Americans suffering from early-stage Alzheimer's, the costs to the insurance program could be meaningful, leading to higher healthcare costs for most seniors. Just Tuesday, CMS said premiums and deductibles would be declining next year due to lower-than-projected spending on Aduhelm specifically. Now, the government might find itself paying for another pricey Alzheimer's drug.

Just how pricey will be an important question. Biogen has probably learned some hard lessons from the backlash it got to the Aduhelm launch at $56,000 a year, so expect it to price lecanemab at closer to $20,000. Still, the costs -- and the payoff for investors -- are likely to be astronomical." [1]

1. Alzheimer's Drug Raises Hopes, Costs --- Results of Biogen's treatment breathe new life into anti-amyloid drugs that were partially written off
Wainer, David. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 29 Sep 2022: B.12.