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An experimental Alzheimer’s disease treatment developed by Eisai and Biogen that appears to slow cognitive decline sent shares in both companies soaring, but some analysts are tempering their expectations until they get a better idea if Medicare will pay for the drug.
U.S.-listed shares of Eisai
ESALF,
were up 61.9% and Biogen’s
BIIB,
stock gained 35.4% in trading on Wednesday, the day after the companies announced lecanemab reduced cognitive decline by 27% in 18 months compared with placebo. The confirmatory Phase 3 clinical trial also met its secondary endpoints, they said.
Drug companies have long struggled to bring to market effective therapies that can delay or halt the progression of the disease. An estimated 6.5 million people in the U.S. who are 65 years old or older have Alzheimer’s.
While the new lecanemab data appears strong enough to support Food and Drug Administration approval, the bigger question is whether the Centers for Medicare and Medicaid Services will reimburse patients who take the therapy if and when it is approved. The CMS issued a national coverage determination in April that put limitations on coverage of anti-amyloid monoclonal antibodies that haven’t shown a clinical benefit.
“FDA approval seems likely, but CMS determination [is] another bridge to cross,” Wedbush’s Laura Chico told investors Wednesday morning. “It’s a positive to see the study reach statistical significance, with FDA previously signaling this would be a prerequisite for approval. However, what CMS will see as a clinically meaningful outcome remains to be determined.”
The CMS policy essentially shut down broad access to Aduhelm, another Alzheimer’s treatment developed by the same companies with a more complicated back story. Biogen halted the development of the drug back in 2019, saying it wouldn’t meet the primary endpoints in an important clinical trial; then, in 2020, the company announced that a new analysis showed that the drug did, in fact, work, and it would seek FDA approval.
What followed were years of scientific and regulatory whiplash. Some Wall Street analysts panned the drug. An FDA advisory committee voted that Aduhelm’s benefits didn’t outweigh the risk. The FDA approved it anyway, causing several committee members to resign. A federal investigation is now under way into the FDA approval process. Some hospitals declined to prescribe Aduhelm to their patients. And, then, the final nail in the coffin was the CMS decision to limit access to the drug to people participating in clinical trials as part of a broader coverage policy for amyloid-beta targeting treatments.
“The positive Phase 3 CLARITY [Alzheimer’s disease] data are sufficient to support traditional approval of lecanemab given the highly significant and consistent results, and the community will be watching for CMS’s potential change of stance on its coverage of anti-Abeta mAbs,” SVB Securities analyst Marc Goodman told investors.
That said, not all of Wall Street is worried about the regulatory and reimbursement environment for this class of Alzheimer’s treatments. Mizuho Securities upgraded Biogen’s stock to buy from neutral on Tuesday night after the clinical data was announced.
“Assuming full [FDA] approval, we would expect CMS reimbursement and a meaningful commercial opportunity for lecanemab (unlike the challenges faced by Aduhelm on the reimbursement front),” wrote J.P. Morgan’s Chris Schott, who predicts peak sales between $6 billion and $10 billion for lecanemab.
The companies are expected to share the full set of data from the trial in November at the Clinical Trials on Alzheimer’s Congress meeting. Eisai said it is in discussion with regulators in the U.S., Europe, and Japan, and it plans to file for full approval in the U.S. before next April.
Eisai’s stock is up 14.1% so far this year, while Biogen shares have climbed 11.6%. The S&P 500
SPX,
has declined 23.5% since the start of 2022.
