Eli Lilly (LLY -0.27%) and Biogen (BIIB 1.69%) will soon likely be going head to head in the market for therapies that treat Alzheimer's disease. Both drug developers see the market for such medicines as being a major one in the coming years, and their candidates are set up to duel for the first leg of growth.
But which company is more likely to win in this market's opening phase? Let's dive in and evaluate the case for each on the basis of how their medicines seem to perform so far.
In this niche, these two rivals are more similar than different
Given that Biogen is the business that has Alzheimer's disease therapies on the market today, it's hard to argue that Eli Lilly is even a competitor just yet. Biogen's medicine, Leqembi, just scored a full approval from the Food and Drug Administration (FDA), whereas Eli Lilly's candidate -- donanemab -- might only get approval toward the end of the year, assuming it does at all.
But there could be reason to believe that Leqembi will have a hard time retaining its market share against donanemab, which would make Eli Lilly the decisive winner of this matchup. Here's why. Per the results of its recently concluded phase 3 clinical trial, donanemab reduced the risk of Alzheimer's progressing by 38% over the 18-month study period. But 1.9% of the patients in the trial's treatment group passed away in comparison to only 1.1% of the placebo group.
Making a fully rigorous direct comparison between donanemab and Leqembi isn't possible because their clinical trials were designed differently. Nonetheless, if we're willing to accept a few edges not lining up perfectly, we can get an idea of which medicine seems to be better given what we know right now. And per its trial data, Biogen's drug slows the rate of decline by 27% for around 18 months compared to a placebo. Plus, while there were plenty of serious side effects associated with Leqembi, most of which are shared with donanemab, patients in the treatment group did not die at a faster rate than those in the placebo group.
So, it looks like Leqembi is more effective, but that it carries a slightly riskier side-effect profile that has real human costs. What will prescribers choose when patients need help? The ultimate answer is unclear as concerns like pricing, patient-monitoring regimens, and insurance coverage remain up in the air. But if donanemab is approved by regulators and priced a bit lower than Leqembi's $26,500 per year, or treated more favorably by Medicare, it could be the decisive winner.
Don't decide based on this matchup alone
Both Biogen and Eli Lilly are big pharma businesses that have plenty of other products and pipeline candidates outside of Alzheimer's. Eli Lilly claimed more than $28 billion in sales for 2022, whereas Biogen had just over $10 billion. Per a report by Growth Plus Reports, the total market size for Alzheimer's medicines will reach roughly $10 billion shortly after 2031. So, when considering that there will probably be other competitors in the space by then, neither will have a lock on the market.
With that in mind, it's easier to grow a small amount of money by a big proportion than it is to grow a larger amount by the same proportion. In other words, Biogen, by virtue of having a smaller top line, could experience more growth than Eli Lilly if its medicines have the same level of success in gaining traction. That would likely make its stock rise more on account of its Alzheimer's drug-development activities specifically.
Even if donanemab's slight edge in efficacy as shown in clinical trials leads to more widespread use, there will probably be a market for Leqembi. And for those thinking of an investment solely to capture growth in the Alzheimer's market, that will likely make Biogen the better option of the pair at the moment.
Of course, Biogen would also be harmed more than Eli Lilly would if Leqembi struggles. And the rest of its sales are struggling at the moment, unlike Eli Lilly's. So if you're looking for the safer choice, it's Eli Lilly.