Today – we all have something to celebrate – Biogen and Eisai were developing lecanumab for treatment of Alzheimer disease (after aducanumab flopped) and despite much skepticism, lecanumab Phase 3 study CLARITY-AD study was positive and the data was very clean!
Key datapoints from the press release are as follows:
EFFICACY WAS OUTSTANDING AND UNEQUIVOCAL:
Lecanemab treatment met the primary endpoint and reduced clinical decline on the global cognitive and functional scale, CDR-SB, compared with placebo at 18 months by 27%, which represents a treatment difference in the score change of -0.45 (p=0.00005)
All key secondary endpoints were also met with highly statistically significant results compared with placebo (p<0.01) – the key secondary endpoints were as follows:
the change from baseline at 18 months compared with placebo of treatment in amyloid levels in the brain measured by amyloid positron emission tomography (PET),
the AD Assessment Scale-cognitive subscale14 (ADAS-cog14),
AD Composite Score (ADCOMS)
AD Cooperative Study-Activities of Daily Living Scale for Mild Cognitive Impairment (ADCS MCI-ADL)
SAFETY HAS POENTIAL TO BE BEST IN CLASS:
The incidence of amyloid-related imaging abnormalities-edema/effusion (ARIA-E), an adverse event associated with anti-amyloid antibodies, was 12.5% in the lecanemab group and 1.7% in the placebo group.
The incidence of symptomatic ARIA-E was 2.8% in the lecanemab group and 0.0% in the placebo group.
The ARIA-H (ARIA cerebral microhemorrhages, cerebral macrohemorrhages, and superficial siderosis) rate was 17.0% in the lecanemab group and 8.7% in the placebo group.
The incidence of symptomatic ARIA-H was 0.7% in the lecanemab group and 0.2% in the placebo group.
There was no imbalance in isolated ARIA-H (i.e., ARIA-H in patients who did not also experience ARIA-E) between lecanemab (8.8%) and placebo (7.6%).
The total incidence of ARIA (ARIA-E and/or ARIA-H) was 21.3% in the lecanemab group and 9.3% in the placebo group.
Overall, lecanemab’s ARIA incidence profile was within expectations.
With PDUFA coming up for the accelerated filing in January 2023, lecanumab is well positioned for approval in 1Q23 – this is only 3 months away from data.
Lecanumab will have more detailed data in November at CTAD (Clinical Trials on Alzheimer Disease) conference, but the press release from today provided enough data for me to have high conviction on clinical meaningfulness AND commercial success.
NOW – WHAT DOES THIS MEAN FOR STOCKS??
BIOGEN ($BIIB): COMPLETE TRANSFORMATION OF EQUITY STORY TO THE UPSIDE
Lecanumab data is a monster win for Biogen. Biogen had bet the company on alzheimer’s franchise and frankly, legacy business is under significant pressure across all front.
The revenue decline was STRUCTURAL with competition from more efficacious/convenient therapy and biosimilar/generic entries as well.
With stock sitting on rapidly melting ice cube, Biogen stock was sitting on five year low until today.
AND LECANUMAB DATA COMPLETELY CHANGES THE EQUITY STORY HERE!
This is an event that 1) raises estimates and 2) expands multiple –
- Raise estimates: lecanumab data was unequivocally good. It likely drives significant penetration and investors are now assigning almost 100% probability of success. 2025 earnings per share went significant higher just on this.
- Expands multiple: Biogen earnings are now on LT growth mode with lecanumab. P/E multiple should expand significantly with multi-year growth expected on a single product now.
- EPS growth + Multiple expansion = Compounded effect for the stock price.
I am not going to put down specific target price here. But I will say this – stock has consistently hit $350 or higher in prior times when investors had hopes for its alzheimer franchise. Now, lecanumab data was better than anybody expected.
Eli Lilly ($LLY): POSITIVE READ-THROUGH TO ITS A-BETA DRUG DONANEMAB
Eli LLY is one of favorite large cap pharma because the management has positioned the company into areas with significant secular growth. Diabetes has been bread and butter for Lilly, but Lilly is now moving into mega growth therapeutic areas, including Obesity and Alzheimer’s disease.
Lilly’s horse in Alzheimer’s disease is donanemab – it had promising P2 data on a relatively large trial and it has P3 trial data coming in December 2022 or early 2023.
As shown in below curve, donanemab has shown clear separation from placebo on key endpoints in P2.
Donanemab is also generally viewed as the best amyloid clearing therapy in late stage development – it generally is viewed to clear amyloid plaque the fastest.
For this reason, LLY hit all time high stock price today – reflecting investor enthusiasm for donanemab. Essentially investors are saying “if lecanumab can show that data, donanemab could at least replicate lecanumab’s data or even better!”
Roche ($RHHYBY): POSITIVE, BUT IS IT REALLY?
On surface, Roche also benefitted from lecanumab because Roche has gantenerumab – anti-amyloid beta drug that has the same mechanism of action as lecanumab. Gantenerumab’s mechanism is essentially validated, but now the question will shift to how would it compare to lecanumab? this may put roche in an awkward position from competitive perspective.
However, there is one caveat here – there are key differences between gantenerumab and lecanumab.
- Titration schedule: gantenerumab has 12 month long titration schedule (you raise dose over time to get to full dose) while lecanumab has no titration (full dose at the beginning). Lecanumab didn’t reverse disease progression, but slowed the disease progression. This means gantenenumab patients could be still progressing at similar pace as placebo patients given they are underdosed. curve separation could be slower, which can have a deterimental impact of statistical analysis.
- subcu vs. intravenous: gantenenumab comes with dosing advantage for commercialization as it is subcu. subcu injection can complicate things with PK/PD – further leading to slowing impact on potential amyloid clearing.
Gantenerumab’s probability of success went up, but now given that lecanumab data was so good, it means the bar is now higher for gantenerumab to beat lecanumab. Alzheimer’s disease is a highly debilitating disease and patients and physicians are unlikely to compromise on efficacy for convenience. Lecanumab will also be available in subcutaneous formulation over time – further complicating commercial picture for gantenerumab.
Gantenerumab data is expected at CTAD (yes, same venue where Biogen will share detailed lecanumab data) in November.
HOW ITS IMPLICATIONS FOR SMID BIOTECHS?
I think it is beneficial for biotechs who could be buyout targets for $biogen. For biogen, now it has growth driver, but it does not change the need to replace existing revenues near term.
My M&A bucker for Biogen are $ITCI, $NBIX, and $ACAD for commercial and $IONS for platform technology (Biogen has its SMA franchise and ALS franchise programs built on IONS technology).
intra-cellular could be a good buyout target for Caplyta
neurocrine could be a good buyout target for Ingrezza and its pipeline programs
acadia could be a good buyout target for Nuplazid
Caplyta, Ingrezza or Nuplazid would essentially be plug and play for Biogen salesforce who are already detailing to overlapping physicians.
Are you ready to invest in alzheimer stocks?
*not investment advice.
No thanks – I’d rather stick pins in my eyes.