Until Tuesday evening, it seemed that drug developers such as Biogen, Eli Lilly, and Roche Holding were looking for Alzheimer's treatments in all the wrong places.
The leading theory of the disease, known as the beta amyloid hypothesis, seemed all but disproved, and the anti- amyloid antibody drugs in Phase 3 trials seemed doomed to failure.
Then came the data.
Phase 3 trial results out Tuesday night from Eisai (ticker: ESALY) and its partner Biogen (BIIB) are startling, not only because they show that their drug lecanemab actually did slow cognitive decline, but because they suggest that a theory that seemed all but consigned to the dustbin still has legs.
Biogen shares are up 40.8% Wednesday, to $278.52, while shares of Lilly (LLY), which has Phase 3 data on a similar drug coming next year, were up 6%. American depositary receipts of Roche (RHHBY), which has Phase 3 data on its own similar drug coming later this year, were up 0.9%.
Investors who were prepared for the trial to fail will now have questions about the landscape emerging in the wake of this positive data. Here are some major unknowns, and a few early answers.
How good is lecanemab?
Eisai reported Tuesday night that after 18 months, lecanemab slowed cognitive decline in early-stage Alzheimer's patients by 27%, using a scale known as CDR-SB, which measures dementia symptoms. The company said it saw "highly statistically significant changes" between the placebo group and the treatment group beginning after six months.
By contrast, Biogen and Eisai's previous Alzheimer's drug, Aduhelm, failed to show a cognitive benefit in one trial, and in another trial slowed cognitive decline by 22%. In a feature published last week, Barron's noted that Eisai had targeted a 25% slowing in the lecanemab. Cowen analyst Phil Nadeau told Barron's at the time that a 35% slowing would be "really striking."
The question for investors is whether the data will be good enough to satisfy not just the Food and Drug Administration, but also the Centers for Medicare and Medicaid Services, which refused to cover Aduhelm earlier this year.
Most analysts said that the decline observed in the lecanemab trial was clinically meaningful. "This appears to be basically a near best case scenario and should lead to full FDA approval," Jefferies analyst Michael Yee wrote late Tuesday.
Piper Sandler analyst Christopher Raymond, however, struck a note of caution. He said that the clinical meaningfulness "is still TBD." The CDR-SB scale, he noted, ranges from 0 to 18; the difference between the placebo group and the treatment group in the lecanemab trial was less than half a point.
"Even with every indication that shares will open up meaningfully higher this morning, we would not chase the stock," Raymond wrote of Biogen.
What does it mean for Biogen?
The lecanemab readout represented a fork in the road for Biogen: A negative outcome would mean talk of stripping the company for parts, while a positive outcome would mean a likely mega-blockbuster drug on the near-term horizon.
Biogen needed a win, and investors seem confident Wednesday morning that it had one, sending shares up sharply. In a note out late Tuesday, Mizuho analyst Salim Syed wrote that he was modeling $8 billion in peak annual worldwide sales for lecanemab.
Some questions remain about what it will all mean for Biogen, however. Lecanemab profits are split 50/50 between Biogen and Eisai. What's more, the outcome of the Lilly and Roche trials will have a significant impact on the long-term market for Alzheimer's therapies. These drugs are all similar, but have key differences, and how the efficacy and safety data compares will have real implications for uptake.
One important short-term implication for Biogen is that it will likely make it easier for the company to hire a new CEO to replace Michel Vounatsos, who has announced his intention to leave. All of a sudden, leading Biogen doesn't seem like much of a drag, after all.
What does it mean for Lilly and Roche?
Lilly is waiting on data on donanemab, due next year, while Roche is waiting on data on gantenerumab, due later this year. The lecanemab data increases the odds that those trials will be positive.
In a note out Wednesday, UBS analyst Colin Bristow wrote that the lecanemab data set a high bar for Lilly to meet when its donanemab data come in the first half of next year. Still, he wrote, "this is a large market opportunity that can support multiple players."
For Roche, the implications are similar. In a separate note, UBS analyst Michael Leuchten wrote that the opportunity for gantenerumab could be between $500 million and $10.5 billion, depending on the data coming in the fourth quarter of this year.
What does it mean for biotech writ large?
The SPDR S&P Biotech ETF (XBI) is up 2.5% on Wednesday, while the S&P 500 is up 0.3%. As happened earlier this summer, biotech stocks have a tendency to run up when there's good news in the sector. One possible outcome is that the lecanemab surprise could spark a broader biotech revival.
What's next for lecanemab?
Eisai says that it will present the full results of their Phase 3 lecanemab trial on Nov. 29, at a scientific conference. The company has already submitted a request to the FDA for accelerated approval of lecanemab; the FDA has until Jan. 6 of 2023 to decide.
Eisai said Tuesday that it plans to ask for full approval of lecanemab by the end of next March. That could put an FDA decision on full approval by sometime late next year.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com