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Biogen stock price jumps on Alzheimer’s drug trial result: Do BIIB shares have more upside?

By Jenal Mehta

11:32, 29 September 2022

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In this article:
BIIB
Biogen
289.28 USD
-2.21 -0.760%
4523
Eisai Co., Ltd.
9637.1 USD
-137.6 -1.420%
LLY
Eli Lilly
372.03 USD
-0.53 -0.140%
ROGz
Roche
303.1 USD
0 0.000%

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drug trials in a pharma lab
Biogen and Eisai see their values double as news broke of alzheimers drug success. Photo - Getty Images

Pharma companies Biogen (BIIB) and Eisai (4523) have claimed to have successfully developed a drug to treat Alzheimer’s disease.

The news moved Biogen and Eisai share values 40% and 30% higher respectively, recovering some of the share price losses seen since mid-2021.

The excitement among investors filtered into the share prices of peers, Eli Lilly (LLY) and Roche (ROGz). These two companies are also developing similar drugs, which now holds a higher promise of success.

Biogen (BIIB) share price chart

The experimental drug known as lecanemab has passed its phase 3 trials. The next step would be to seek approval from the Food and Drug Administration (FDA) which can take years. The companies are also seeking approval in Europe and Japan. Only after that might the tangible revenue peak investor interest again.

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First drug of its kind...?

This is in fact not the first attempt by Biogen (BIIB) and Eisai (4523) to find a drug to cure Alzheimer’s disease. The pair were also responsible for working on Aduhelm which also passed its phase 3 trials and was approved by the FDA. However this approval was considered controversial due to its ad hoc results.

Following this, The Center for Medicare & Medicaid Services (CMS) limited coverage of the drug. It recommended that the producers may only be reimbursed if the drug is used in clinical trials, a highly unusual move for a drug which has been approved by the FDA. This of course reduced the earning potential for Biogen and Eisai.

Angus Liu at Fierce Pharma recently wrote: “Statistically significant advantage that could support an FDA approval is not necessarily the same as what CMS views as clinically meaningful for full reimbursement”.

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However, lecanemab is showing better promise than other drugs. Liu says “It found lecanemab could slow cognitive decline—not just clearing the amyloid beta plaques in the brain—in a statistically significant way among mild Alzheimer’s patients.”

Even the Alzheimer's Association called the data emerging from the trails of lecanemab as "the most encouraging results in clinical trials treating the underlying causes of Alzheimer's to date."

Eisai (4523) Price Chart 

Stock outlook

During the Covid 19 pandemic, pharma companies who were not involved in developing drugs for the virus lost investor confidence. Biogen and Eisai were no exception. Both companies have lost 50% of their values since mid-2021, the recent rally only partially recovering the prices.

While the drug has finished its phase 3 trials it still remains to be approved by the FDS, and it won’t be until then that sales profits will be seen for the drug. Investors, however, appeared to be positioning for good news on this front, pushing Biogen's shares to their highest level in nearly a year.

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