Eisai (ESALY) and Biogen (BIIB) announced positive topline results from the former’s large global Phase 3 confirmatory Clarity AD clinical trial of lecanemab for the treatment of Alzheimer's disease. The pharma companies said the drug reduced cognitive and functional decline by 27% relative to a placebo. The news has sent not only Biogen’s stock higher, but also shares of several other drugmakers working in the space, such as Prothena (PRTA), Eli Lilly (LLY), MorphoSys (MOR) and Acumen Pharmaceuticals (ABOS). Several Wall Street analysts upgraded Biogen to Buy-equivalent ratings on Wednesday morning, with Bank of America analyst Tazeen Ahmad also raising Prothena’s rating to Buy, citing positive read-through given how the latest data strengthens the "amyloid thesis" for fighting the disease.
ALZHEIMER’S STUDY RESULTS: Eisai and Biogen announced “positive” topline results from Eisai's large global Phase 3 confirmatory Clarity AD clinical trial of lecanemab, an investigational anti-amyloid beta protofibril antibody for the treatment of mild cognitive impairment due to Alzheimer's disease, AD, and mild AD with confirmed presence of amyloid pathology in the brain. Lecanemab met the primary endpoint and all key secondary endpoints with highly statistically significant results.
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 in the analysis of Intent-to-treat population. Starting as early as six months, across all time points, the treatment showed highly statistically significant changes in CDR-SB from baseline compared to placebo. All key secondary endpoints were also met with highly statistically significant results compared with placebo. Key secondary endpoints were the change from baseline at 18 months compared with placebo of treatment in amyloid levels in the brain measured by amyloid positron emission tomography, the AD Assessment Scale-cognitive subscale14, AD Composite Score and the AD Cooperative Study-Activities of Daily Living Scale for Mild Cognitive Impairment.
BUY BIOGEN: Following the news, BMO Capital analyst Evan Seigerman upgraded Biogen to Outperform from Market Perform with a price target of $360, up from $217. The analyst views the CLARITY-AD data "as a near-best case." The top-line data is “as strong as can be,” with high statistical significance across all endpoints, Seigerman told investors. The analyst added that the "data doesn't get much cleaner than this in biotech." Importantly, the news diminishes the possibility for Centers for Medicare and Medicaid Services to deny broad coverage of the Alzheimer's drug once approved, Seigerman wrote. Given the results, he has increased his lecanemab unadjusted peak sales estimate to $13.3B from $5.4B and probability of success odds to 90% from 50%.
Baird analyst Brian Skorney also upgraded Biogen to Outperform from Neutral with a price target of $340, up from $224, also calling the CLARITY-AD trial in early Alzheimer's disease patients "pretty much a best-case scenario." The data should not only lead to approval and reimbursement, but could make it challenging for competition to match, Skorney contended.
Meanwhile, Mizuho analyst Salim Syed raised his rating on Biogen to Buy from Neutral with a price target of $270, up from $207. The analyst now assumes $8B in end-user, non-risk-adjusted worldwide peak sales for lecanemab, which is pre-50/50 profit split between Biogen and Eisai. Syed now has assigns an 80% probability of success for lecanemab, up from 40% previously. The total addressable market for Alzheimer's is a key question, but assuming 3M mild Alzheimer's patients at $20,000 per patient, the market could be $60B-plus, Syed told investors. He thinks there will be a debate around this number, but points out the addressable market "could be quite sizable."
POSITIVE READ-THROUGH: BofA analyst Tazeen Ahmad upgraded Prothena to Buy from Neutral with a price target of $65, up from $45, following the positive data reported from Biogen and Eisai's Phase 3 Alzheimer's trial for lecanemab. While admitting "there is still debate about the meaningfulness of the data and addressable market," the trial result is "a big milestone in the treatment of AD" and reads through positively to Prothena given how it strengthens the amyloid thesis, Ahmad told investors. Given the positive lecanemab data, Ahmad adjusted assumptions for PRX012 and increased the view on the odds of success for PRX012 to 35% from 25%, while also seeing a higher likelihood of success for PRX123.
Meanwhile, Mizuho analyst Graig Suvannavejh told investors that he believes Biogen's positive Phase 3 data for lecanemab will serve as an overall catalyst for companies working in the Alzheimer's space. Furthermore, he views the Phase 3 data as a "significant positive" for companies not only working on Alzheimer's, but also the neurodegenerative disease space, "where there remains a very high unmet medical need." The companies that could stand to most directly benefit from a stock perspective include Alector (ALEC), Athira Pharma (ATHA), Axsome Therapeutics (AXSM), BioXcel Therapeutics (BTAI) and Cerevel Therapeutics (CERE), Suvannavejh said.
Additionally, Morgan Stanley analyst Terence Flynn said he sees the news as likely to lead Eli Lilly shares to trade up about 5%-10% in sympathy. These data leave him with more confidence in the a-beta hypothesis and the likelihood of success for Lilly's donanemab Phase 3 data due in the first half of 2023. Flynn has an Overweight rating and $412 price target on Eli Lilly shares.
PRICE ACTION: In Wednesday morning trading, shares of Biogen have jumped over 36% to $269.49. Also higher, Prothena’s stock has soared almost 77% to $54.67, MorphoSys has gained about 20% to $5.33, Acumen has advanced more than 68% to $7.93, and Eli Lilly has risen over 8% to $336.37.