What happened
Shares of Biogen (BIIB -1.39%) were skyrocketing 36% as of 11:10 a.m. ET on Wednesday. The huge gain came after the company and its partner Eisai (ESALY -1.97%) announced positive results on Tuesday from their late-stage Clarity AD study evaluating lecanemab in treating Alzheimer's disease.
The news also propelled two stocks of other drugmakers developing Alzheimer's disease drugs significantly higher. Shares of Eli Lilly (LLY -1.16%) and Prothena (PRTA -1.41%) were jumping 8.3% and 69.9%, respectively.
Biogen and Eisai stated that lecanemab met the primary endpoint of the study with a 27% reduction in cognitive decline compared with placebo at 18 months. All key secondary endpoints of the study were also met.
So what
The results for lecanemab were surprisingly good. They also were sorely needed by Biogen. Prior to today's move, the biotech stock had plunged more than 50% since June 2021. That huge decline came following the Centers for Medicare and Medicaid Services decision to not reimburse for Biogen's other Alzheimer's disease drug, Aduhelm.
Guggenheim analyst Yatin Suneja projects that lecanemab could generate peak annual sales of between $6 billion and $8 billion if approved. The success of the experimental drug in Biogen's and Eisai's late-stage study also could bode well for other amyloid-targeting drugs in development.
Lilly is currently awaiting a decision by the U.S. Food and Drug Administration (FDA) for donanemab as a treatment for early Alzheimer's disease. Prothena is evaluating experimental Alzheimer's disease therapy PRX012 in phase 1 testing.
To be sure, the positive results for lecanemab don't guarantee an FDA approval for donanemab or similar clinical results for PRX012. However, investors are clearly -- and justifiably -- more optimistic about the two experimental drugs' chances in light of Biogen and Eisai's data.
Now what
Biogen and Eisai already filed for FDA approval of lecanemab in July 2022. The FDA is scheduled to make a decision by Jan. 6, 2023, under its accelerated approval pathway. Accelerated approvals require confirmatory studies to be conducted. However, the agency agreed to allow the Clarity AD study to serve as the confirmatory study.
The FDA should announce an accelerated approval decision on Lilly's donanemab in January 2023 as well. Lilly is conducting a confirmatory study with results expected to be announced by the middle of next year. The big drugmaker plans to use those results as the basis of its application for full FDA approval of the drug.
Prothena is much earlier in the development process. The company anticipates reporting top-line data from its phase 1 study of PRX012 in 2023. It also plans to begin another phase 1 multiple ascending dose study of the drug by the end of this year.
