The controversial approval of Aduhelm, an Alzheimer's disease drug from Biogen (BIIB 3.44%) pushed shares of the biotech stock through the roof in June. Around one in nine adults age 65 and older are losing their minds to Alzheimer's disease and Aduhelm is their only treatment option.
Blockbuster Aduhelm sales could push Biogen stock even higher. Before running out to purchase the risky biotech stock, though, there's another Alzheimer's drug developer to consider.
When the FDA granted accelerated approval to Aduhelm, it opened a door that Eli Lilly (LLY -1.18%) has already started stepping through with its Alzheimer's disease treatment candidate, donanemab. That's because it has shown an ability to do something that didn't seem so important before the FDA gave Aduhelm an accelerated approval.
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Potential competition for Biogen's most important asset isn't the only reason to buy Eli Lilly stock a the moment. Here's what you should know about the differences between the two drugmakers at the moment.
The biomarker door is open
Aduhelm is the first drug approved by the FDA to stop Alzheimer's disease from getting worse, but it wasn't approved because it improved outcomes. Instead, the FDA granted Aduhelm accelerated approval based on biomarker data which in this case, involves measuring the clearance of amyloid plaques thought to be responsible for Alzheimer's disease.
There isn't much evidence to support the amyloid theory, so the FDA gave Biogen until 2029 to complete a confirmatory study. Technically, this leaves the door open for several discarded Alzheimer's disease candidates that clear amyloid plaques, but never showed strong evidence of a cognitive benefit. Analysts who follow Roche (RHHBY -2.34%) assume the company will try for accelerated approval of gantenerumab, even though Roche hasn't made an official announcement.
Roche tends to play its cards close, but not Eli Lilly. Just weeks after Aduhelm earned accelerated approval, the U.S. pharmaceutical giant reported a breakthrough therapy designation from the FDA for donanemab and unveiled plans to submit an application for accelerated approval before the end of the year.
About Aduhelm's potential competition
During the 257-patient phase 2 Trailblazer study, investigators measured a significantly lower rate of cognitive decline for patients treated with donanemab versus placebo, but there are some important caveats. Eli Lilly created a composite scale that combines cognitive and functional measurements called the integrated Alzheimer's disease rating scale (iADRS).
After 76 weeks of treatment, the patients treated with a placebo declined by 10.06 points on the 144-point iADRS scale while patients given donanemab fell by 6.86 points on average. In other words, the difference really isn't anything to get excited about.
When it comes to clearing amyloid, though, donanemab is downright amazing. Patients with mild to moderate AD generally show enough amyloid in brain imaging tests to score 100 points on the Centiloid scale while healthy patients score 0 points. Brain scans of patients treated with donanemab showed a whopping 85.1 point reduction compared to the placebo group after 76 weeks. More than two-thirds of patients treated with donanemab achieved amyloid negative status.
During a study leading to its approval, patients treated with Aduhelm showed a 64.2 point amyloid reduction compared to a placebo. These were different populations so any cross-trial comparisons need to be taken with a grain of salt. Until donanemab and Aduhelm are tested in a head-to-head trial, though, it looks like Eli Lilly's drug has an advantage.
Image source: Getty Images.
Beyond Alzheimer's disease
It's Eli Lilly's successful products beyond Alzheimer's disease, and the cash flows they generate that make the pharma giant a better buy for cautious investors right now. During the first quarter of 2021, Biogen reported topline sales that fell 24% year over year to $2.7 billion. A successful launch for Aduhelm could offset Biogen's losses and return the company to growth but Eli Lilly's growing right now.
Thanks to sharply rising sales of several blockbuster drugs, Eli Lilly reported first-quarter revenues that soared 16% year over year to $6.8 billion. On the bottom line, Eli Lilly expects adjusted earnings to rise 15% to 18% year over year in 2021. Generic competition for Tecfidera, Biogen's oral multiple sclerosis treatment, began in the U.S. last summer and that isn't the only revenue stream under pressure.
Competing new drugs have also been rough on sales of Biogen's treatment for a rare muscle-wasting disorder, Spinraza. With its top-selling drugs losing ground, Biogen told investors in April to expect revenue to continue falling from $13.4 billion in 2020 to a range between $10.45 billion and $10.75 billion this year.
Investors willing to take a risk on Biogen could come out far ahead if the Aduhelm launch proceeds without a hitch. If not, though, shareholders buying the stock at recent prices could suffer losses.
With a diverse collection of rising revenue streams, patient investors are almost certain to come out ahead with Eli Lilly. This doesn't mean there's anything necessarily wrong with Biogen at the moment, it's just a lot riskier.
