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What increasing confidence in Biogen’s latest Alzheimer’s drug means for Eli Lilly

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Wall Street increasingly believes U.S. drug regulators will approve Biogen ‘s (BIIB) latest experimental Alzheimer’s treatment following the release of detailed late-stage clinical trial data. It’s a development that may carry positive implications for Eli Lilly (LLY) because the Club holding is investigating a similar drug targeting the disease. Lecanemab — jointly developed by Biogen and Japanese pharmaceutical firm Eisai — “moderately” slowed cognitive and functional decline in early Alzheimer’s patients who took the drug compared with placebo recipients, according to a New England Journal of Medicine review of the 18-month trial results. The full phase three trial results were published Tuesday, roughly two months after Biogen and Eisai released encouraging topline data from the Clarity AD study. While there are some concerns about lecanemab’s safety, analysts at JPMorgan said the adverse events observed during the trial such as brain swelling appear “manageable.” “BIIB/Eisai have already filed the drug for accelerated approval and we see results from Clarity AD supporting full approval for the product,” the firm wrote in a note to clients Tuesday night. “Today’s data also bodes well for LLY’s donanemab,” the analysts added. Donanemab is the name of Eli Lilly’s Alzheimer’s drug in its own late-stage trials. JPMorgan has a neutral (hold) rating on Biogen shares and an overweight (buy) rating on Eli Lilly shares. “Some points for debate around the edges, but data should further de-risk approval” for lecanemab, wrote Barclays analysts, who have the equivalent of a hold rating on Biogen shares. The analysts also note there are questions about the magnitude of lecanemab’s clinical benefit. Shares of Massachusetts-based Biogen rose more than 5% on Wednesday. Lilly shares were higher in mid-afternoon trading. What it means for Eli Lilly Eli Lilly has a phase three trial underway for its donanemab Alzheimer’s drug that is similar to lecanemab, which is why the Biogen-Eisai data has been interpreted as favorable for the Club holding. Eli Lilly’s large-scale trial data is expected by the middle of next year. Alzheimer’s is a progressive disease, meaning it worsens over time, and there is no available cure. However, both experimental treatments are intended slow the progression of Alzheimer’s disease by reducing build up on the brain of amyloid beta protein . This approach has become known as the a-beta hypothesis. Clumps of the protein, known as amyloid plaques, are one of the key markers of Alzheimer’s disease. The other primary marker are tangles of the tau protein . The accumulation of amyloid plaques and tau tangles in between neurons disrupts normal brain functioning. This leads to the destruction of brain cells, resulting in the loss of memory and thinking ability. The longstanding question among Alzheimer’s researchers has been whether reducing the presence of amyloid plaques would actually slow the rate of cognitive decline. Previous drugs developed around the a-beta hypothesis — including those from Eli Lilly — have failed to meaningfully delay the disease’s progression. Biogen and Eisai also jointly developed Aduhelm, the only drug targeting amyloid beta that has been approved by the Food and Drug Administration. However, significant concerns about its efficacy caused the federal government’s Centers for Medicare & Medicaid Services (CMS) to sharply limit the drug’s insurance coverage, making a commercial failure. Some believe the trial data for lecanemab data is much more convincing than Aduhelm and lend support to the a-beta hypothesis, bolstering hopes that Eli Lilly’s latest drug may also slow the disease’s progression. The Club take While Eli Lilly’s Alzheimer’s efforts are not central to our investment case, we do generally think that donanemab is a promising experimental therapy. ( We’ve written about it in the past — that much of our bullishness around Lilly has to do with its new type-2 diabetes drug Mounjaro getting additional approval as an obesity treatment.) Eli Lilly understandably tries to keep public expectations in line — after all, millions of people with Alzheimer’s disease and their caregivers want there to be an effective drug — so we cannot be sure about donanemab’s results until we actually see them sometime next year. Given a long history of failed amyloid-targeting drugs, it’s important to keep expectations measured. At the same time, that’s why we take news around Biogen and Eisai’s lecanemab in stride. It’s a much-needed incrementally positive development for other drugs predicated on the a-beta hypothesis, after the Aduhelm setback. In fact, Eli Lilly CEO Dave Ricks has said the topline data released by Biogen and Eiasi in September “certainly reinforce our confidence in donanemab.” It’s not about Lilly being first to market, but rather about whether these type of drugs can actually slow the memory-stealing disease. (Jim Cramer’s Charitable Trust is long LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A pedestrian walks past Biogen Inc. headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.
Adam Glanzman | Bloomberg | Getty Images

Wall Street increasingly believes U.S. drug regulators will approve Biogen‘s (BIIB) latest experimental Alzheimer’s treatment following the release of detailed late-stage clinical trial data. It’s a development that may carry positive implications for Eli Lilly

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