presented the results of a small study of its Alzheimer’s disease therapy donanemab last weekend, investors were hoping for a miracle.
It didn’t materialize, and Lilly (ticker: LLY) shares, which had run up 11.7% when the company previewed the study back in January, slid 11.6% by the end of trading on Thursday.
Those swings in the stock don’t tell the real story of donanemab. The data that Lilly presented last Saturday were positive for Alzheimer’s drug development in general, and for donanemab in particular, even if it didn’t meet investors’ high expectations.
“The data’s nuanced,” says Louise Chen, an analyst at Cantor Fitzgerald. “You could read it how you want to read it, and I think that’s why it’s hard for people to make a decision.”
The results of the Phase 2 study don’t radically change the Alzheimer’s disease drug-development landscape. But they do offer support to the notion that the companies working on the problem, including Lilly,
(BIIB), are barking up the right tree.
“This is one set of data, OK, but I think it’s a really encouraging one,” says Ronny Gal, an analyst at Bernstein. “My two cents is that [in] three to five years…we will get there.”
Barron’s wrote about the enormous challenges of treating Alzheimer’s disease with an aging population and the hopes for drugs to fight it in a cover story in early February, “The Other Pandemic: What to Do About the Coming Alzheimer’s Crisis.”
Donanemab probably won’t be approved by the U.S. Food and Drug Administration on the basis of the latest data alone, but analysts say that Lilly does seem to have an actual medicine on its hands. Chen has maintained her Overweight rating on the stock, and a price target of $245, 33.2% higher than its recent $183.93 quote.
What’s more, the results offer further confirmation of the scientific theory behind most of the Alzheimer’s disease therapies under development. Drug companies have been extraordinarily unsuccessful at developing drugs to treat Alzheimer’s disease, with no new therapy approved in 18 years, leading to worries that researchers are wrong about how Alzheimer’s works, and how to treat it.
The FDA is considering the question now in the case of Biogen’s Alzheimer’s drug aducanumab. The agency’s own advisory panel said there wasn’t enough evidence of the drug’s efficacy, and opinions on whether it will be approved remain mixed.
If the scientific theory behind both aducanumab and donanemab, known as the amyloid hypothesis, were to be validated, it might boost aducanumab’s prospects.
Lilly’s chief scientific officer, Dr. Daniel Skovronsky, told Barron’s that Lilly’s study was the best clinical evidence yet in support of the amyloid hypothesis. “When you clear amyloid plaque deeply and quickly, we slow the progression of tau pathology, and we slow cognitive decline,” Skovronsky said. “That’s exactly what the amyloid hypothesis has predicted.”
Experts who have viewed the data in the days since have raised questions about some of the details of Skovronsky’s narrative, noting that the slowing of cognitive decline seen in the study was not statistically significant by all measures, and that the effect on levels of tau, another biomarker linked to Alzheimer’s, was seen only in certain brain regions.
Still, Chen said that the study could bolster confidence in the amyloid hypothesis. “If you believe in beta amyloid, or you believe there is a treatment for Alzheimer’s out there…now you have more evidence than you did before,” Chen said.
That may not be enough to push the FDA to approve aducanumab by its June deadline. Gal noted that the Lilly study has shown the importance of targeting these drugs to very narrow categories of Alzheimer’s patients, something Biogen has not done.
“I think in the long term, I guess it’s a positive; it increases the chance that Biogen has a drug,” Gal says. “Does it increase their chance of being approved without an additional trial? Well, I don’t think so.”
Beyond aducanumab and donanemab, Roche is moving forward with gantenerumab, a similar drug. Close behind are other prospective Alzheimer’s treatments.
For investors, the key is to keep a cool head. “Investors have always responded pretty frenetically to Alzheimer’s data because the goal at the end is so large; it’s just such a large population,” says Marc Goodman, an analyst at SVB Leerink. “I think [the market] was way too excited at first, and on Monday it just gave back some of that excitement.”
Write to Josh Nathan-Kazis at firstname.lastname@example.org