Eli Lilly's (LLY) experimental Alzheimer's treatment snagged a key Food and Drug Administration designation on Thursday. LLY stock surged to a record high.
XThe breakthrough therapy designation allows for a speedier path to approval for Lilly's donanemab and could put the drug on the market in 2023, Mizuho Securities analyst Vamil Divan said in a note. Lilly will ask for approval based on an already complete Phase 2 study.
Like Biogen's (BIIB) recently approved Alzheimer's drug, Aduhelm, Lilly's donanemab clears abnormal plaque in the brain known as beta amyloid. Biogen secured an accelerated approval this month, though experts don't all agree that removing the plaques slows cognitive decline in Alzheimer's patients.
"We have been assuming this might be a possible path for Lilly to take, especially when one compares the speed and depth of donanemab's amyloid reduction to what we have seen from Aduhelm," Divan said. "We assume they may be able to submit the filing in two to three months."
On the stock market today, shares rose 7.3% to 232.97. Earlier, LLY shares soared as high as 10.3% and touched a record high. Biogen stock sank 6.1% to 349.16. Shares popped 38% to 395.85 on June 7 on Biogen's FDA approval, hitting 468.55 intraday.
LLY Stock Surges On FDA Designation
Divan now sees a 90% chance Lilly will gain accelerated approval for donanemab, up from his previous estimate for 60%.
An accelerated approval allows a company to begin selling a drug while working on a test to confirm the benefit. In Biogen's case, it has nine years to finish that test. But Lilly is already working on a test that could function as a confirmatory study.
It's possible Lilly could win accelerated approval in mid-2022 and launch donanemab commercially in 2023. That's up from his prior forecast for 2024. He kept his buy rating on LLY stock, but boosted his price target to 250 from 216.
Divan estimates $11 billion in donanemab sales in 2030 "with room for upside on a faster approval, a higher price, more rapid market uptake and/or higher peak sales." He estimates Lilly could sell the drug for $30,000 a year. A year of Aduhelm maintenance treatment costs $56,000, at a wholesale price.
LLY stock broke out of a cup base with a 218.10 buy point on June 7 after Biogen's Aduhelm gained FDA approval, according to MarketSmith.com, but pulled back to just below the entry on Wednesday. On Thursday, shares surged back above the 5% chase zone.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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