Biogen stock jumped Friday after the Food and Drug Administration approved its second Alzheimer's treatment, now called Leqembi.
The approval is on an accelerated basis, meaning it's contingent upon further testing. Specifically, the FDA says Leqembi should be used in patients with mild forms of Alzheimer's disease. It notes Biogen and partner Eisai tested the drug in one specific group, but didn't test Leqembi in patients with earlier- or later-stage forms of Alzheimer's disease than that group.
"Patients at an early stage of the disease and their caregivers can now consider a new treatment option with their doctors," Biogen Chief Executive Christopher Viehbacher said in an emailed statement. "Our focus now is on the path forward, working alongside Eisai with the goal of making Leqembi available to patients who may benefit from this treatment as soon as possible."
On today's stock market, Biogen stock rose 2.8% to close at 279.25. Eisai stock surged 4.1% and closed at 64.20.
Biogen Stock: CMS Reimbursement Key
Next up, the Centers for Medicare and Medicaid Services will make a decision on whether to reimburse patients for the cost of the Alzheimer's treatment. This is critical for Biogen and Eisai.
Leqembi works by cutting down on built-up plaque in the brain known as beta amyloid. Over the course of 18 months, that led to a 27% slower decline in cognition for patients who received the Alzheimer's treatment vs. the placebo recipients.
But Biogen and Eisai already gained accelerated approval for one Alzheimer's drug, Aduhelm. Medicare officials said they hadn't proved Aduhelm's cognitive benefit in testing and declined to offer broad reimbursement. The question now is whether the agency will repeat that process with Leqembi. Leqembi's benefit was clearer than Aduhelm's in Phase 3 testing.
Leqembi Could Be A Major Blockbuster
If reimbursed, analysts expect the Alzheimer's treatment to be a major blockbuster. In a November report, RBC Capital Markets analyst Brian Abrahams said Leqembi could generate $400 million in worldwide sales in 2024, growing to $5 billion by 2027 and $10 billion by 2031.
That estimate allows some market split with Eli Lilly, which is also working on a beta amyloid-targeting drug, donanemab.
Biogen stock has traded higher with enthusiasm for the prospects of its Alzheimer's treatment. Shares have a strong Relative Strength Rating of 91 out of a best-possible 99.
This means Biogen stock is in the top 9% of all stocks when it comes to 12-month performance, according to IBD Digital.
Safety Questions Remain For Drugs
However, safety questions also plague Biogen and Lilly.
In Biogen's study, 15% of patients had a genetic mutation in their APOE4 gene. This mutation makes them more susceptible to developing early-stage Alzheimer's disease.
It also increases their risk of swelling in the brain in response to amyloid-targeting drugs. This group of APOE4 genetic mutation carriers also underperformed the placebo on a scale of Alzheimer's symptoms.
Overall, about 17% of patients who received Leqembi experienced swelling or bleeding in the brain. In comparison, the side effect occurred in 9% of placebo recipients. The label for Leqembi warns against ARIA, noting it "usually does not have symptoms" but serious and life-threatening events may rarely occur. The label also warns against infusion-related reactions.
Importantly, Biogen stock remains above its 200-day line, though it has fallen below its 50-day moving average in recent weeks, MarketSmith.com shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
