Biogen (BIIB -1.53%) and Eli Lilly (LLY 0.54%) both have Alzheimer's drugs that are in development and could obtain approval from the Food and Drug Administration (FDA) within the next 12 months. In trials, both Leqembi (Biogen) and donanemb (Eli Lilly) have slowed cognitive decline and therefore could be viable treatments in the fight against the debilitating disease.
But there's one potentially large advantage that Leqembi may have over donanemab, and that is in the prevalence of severe side effects. Let's take a closer look.
Potentially less risk of brain swelling and bleeding
Two of the most concerning side effects of these Alzheimer's drugs are brain swelling and brain bleeding, which can be fatal. In late-stage trials for donanemab, 25% of participants experienced brain swelling and 31% experienced brain bleeding. In total, three participants died in the trial.
By comparison, Leqembi -- which Biogen has been developing with Eisai -- had lower rates of these side effects in phase 3 trials. Of the patients who used Leqembi, 13% experienced brain swelling and 17% experienced brain bleeding. There have also been three people who died as a result of using Leqembi .
Of course, the studies weren't identical, and it's possible that results from further trials could vary. Still, it's at least an initial indication of differences between the two treatments.
This could give Leqembi an advantage
Both Alzheimer's treatments slowed the rate of cognitive decline, and there wasn't a big difference in the results. Donanemab slowed cognitive decline by 29% compared to 27% for Leqembi, when using the Clinical Dementia Rating Scale. That's not a significant difference and again the trials wouldn't have been identical to one another.
If neither treatment proves to be vastly more effective than another, doctors are likely to go with the one with the better safety profile. And in that case, it appears that Leqembi may have an advantage given its participants were less likely to experience brain swelling and brain bleeding than those who took donanemab.
Leqembi is poised to generate billions in revenue
There's a significant need to treat Alzheimer's because over 6 million Americans currently live with the disease, and by 2050 that figure could more than double to 13 million. It's a disease that kills more seniors than both breast cancer and prostate cancer combined.
As a result, there's a growing need for Alzheimer's treatments. Analytics firm Grand View Research projects that the global Alzheimer's therapeutics market will expand at a compound annual growth rate of 16.2% through 2030, when it will be worth approximately $15.6 billion.
Eisai previously projected that Leqembi may bring in as much as $7.3 billion in sales at its peak in 2030. Other analysts, however, believe its sales could reach close to $13 billion. Either way, there's significant potential for the drug in the long run, especially if it obtains full approval from the FDA. A decision is expected by July 6. Leqembi has already obtained accelerated approval, but full approval is necessary for the Centers for Medicare & Medicaid Services (CMS) to consider providing coverage for the treatment, which will cost $26,500 per year.
Does this make Biogen stock a buy?
Biogen will share in the profits on Leqembi with Eisai, but given the potential for the drug, that could still be enough to transform its business. In 2022, Biogen generated $10.2 billion in sales and its top line has been declining. A catalyst such as Leqembi could inject the business with some much-needed revenue growth.
At 13 times earnings, Biogen's stock is modestly priced but there is some risk here because until Leqembi obtains approval and CMS confirms coverage, investors may be concerned it could follow in the footsteps of Aduhelm. The latter Alzheimer's drug also demonstrated encouraging trial results and obtained accelerated approval only for CMS to ultimately limit coverage to people involved in clinical trials -- a huge blow for patients interested in using it.
I wouldn't invest in Biogen yet given there's still too much risk here. But should the FDA approve Leqembi, that could turn the tide for Biogen, and at that point, investors may want to consider loading up on the healthcare stock.
