What happened

Shares of Eli Lilly (LLY 0.82%) were soaring 10.7% as of 3:37 p.m. EDT on Monday. The big jump came after the Food and Drug Administration (FDA) approved Biogen's (BIIB 1.64%) aducanumab (Aduhelm) in treating Alzheimer's disease.

So what

Why was Biogen's good news such a strong catalyst for Lilly? The big pharma stock rose because investors are hoping that the FDA approval of aducanumab improves the likelihood that Lilly will also win approval for its Alzheimer's disease drug candidate donanemab.

A document with "Alzheimer's Disease" printed at the top, X-ray images, pills, a pen, and syringes.

Image source: Getty Images.

In March, Lilly reported promising results from a phase 2 study evaluating donanemab in treating Alzheimer's. The experimental drug showed a significant slowing of cognitive decline in patients with early Alzheimer's compared to placebo.

Now what

Lilly chief scientific officer Dan Skovronsky stated in April that the drugmaker wouldn't seek an accelerated approval path for donanemab. The company is evaluating the experimental drug in a phase 3 study that will take around a year to fully enroll patients. With Biogen's stunning FDA victory for aducanumab, however, investors will want to watch closely to see if Lilly rethinks its decision and tries for an early approval of donanemab after all.