Biotech Stocks LLY, ESALY Gain on Biogen’s Positive Trial Results

  • Biogen (BIIB) skyrocketed Wednesday after its Alzheimer’s treatment passed a Phase 3 study.
  • Biogen trial partner Eisai (ESALY) soared even higher while Eli Lilly (LLY) moved up in sympathy.
  • Investors should recognize that Alzheimer’s-related biotech stocks still face challenges.
biotech stocks - Biotech Stocks LLY, ESALY Gain on Biogen’s Positive Trial Results

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Amid a notable positive session for the major equity indices, Biogen (NASDAQ:BIIB) really got the party started with a massive 37% boost in the early afternoon session on Wednesday. Biogen disclosed very encouraging results for its final-phase test for lecanemab, an experimental therapeutic for Alzheimer’s disease. Given the breakthrough, other biotech stocks related to the condition jumped, including trial partner Eisai (OTCMKTS:ESALY) and sector rival Eli Lilly (NYSE:LLY).

The lecanemab therapeutic produced positive top-line results in Alzheimer’s patients suffering from mild cognitive impairment, per the Motley Fool. Specifically, it “met the primary endpoint of significantly reducing the clinical decline” of key cognitive and functional metrics. In addition, the experimental treatment met certain secondary endpoints, including statistically significant benefits on cognition. Lecanemab removes built-up plaque in the brain called beta amyloid.

Naturally, the disclosure bolstered biotech stocks tied to Alzheimer’s treatment due to the subsegment representing a clinical minefield. As the Washington Post mentioned in April 2020, the race for an effective treatment has been riddled with failure. “More than 200 promising leads have fallen through just in the past decade.”

For Biogen, the current news is particularly sweet because it previously forwarded an Alzheimer’s treatment called Aduhelm. However, Investor’s Business Daily noted that “the benefits on cognition were dubious with one successful and one failed Phase 3 test.”

In contrast, Mizuho Securities analyst Salim Syed described the results for lecanemab as “rather clean.” At 18 months, for instance, “patients who received lecanemab showed a 27% slower decline in cognition compared with placebo recipients.”

Biotech Stocks Rise, But Prudence Remains Vital

Based on historical challenges associated with Alzheimer’s research and Biogen’s own frustrations, Wall Street granted biotech stocks a massive lift. At the time of writing, ESALY skyrocketed 63% on Wednesday while LLY gained 8% — a tremendous performance for a blue chip.

SVB Securities analyst Marc Goodman weighed in on the news, suggesting that lecanemab should be clinically meaningful for patients. In turn, it could boost biotech stocks associated with treating Alzheimer’s. “We expect that these positive results will reinvigorate the Alzheimer’s disease space and increase the focus of the investor community for the two near-term anti-amyloid beta (drugs),” he said in a note.

Nevertheless, investors need to be cautious about getting too heavily involved in the aforementioned biotech stocks. Dr. Howard Fillit, chief science officer for the Alzheimer’s Drug Discovery Foundation, stated that the results provided encouragement. However, the breakthrough only represents a first step in treating the disease.

“Amyloid-clearing drugs will provide an incremental benefit at best and there is still a pressing need for the next generation of drugs focused on other targets based on our knowledge of the biology of aging,” he said in an emailed statement to Investor’s Business Daily. “We are optimistic about the future as many of these drugs are in development.”

Still, with the benchmark S&P 500 index down about 8% in the trailing month, Wall Street needed some good news. Investors got it in the form of Alzheimer’s-associated biotech stocks.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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