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Biogen: breakthrough focuses attention on other pharma plays


While there was a frenzy of interest in pharma companies during Covid as investors lapped up any news on vaccination trials, potential anti-virals and recovery drugs, once full-scale vaccination was underway in the US and in Europe that interest gradually petered out.

But this month pharma stocks are back in the headlines over illnesses that will define the coming decades. As the population of the world lives longer and longer neurological illnesses like dementia, Alzheimer’s and Parkinson’s are starting to make up a bigger portion of illnesses suffered in old age. Not only are they debilitating for the affected person and their family, they can also be financially crippling as a sick person requires extensive, frequently institutional, care.

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No wonder than that news that US company Biogen [NasdaqGS:BIIB] made progress in clinical trials for its Alzheimer’s drug Lecanemab made headlines. Its latest set of trials showed the drug slowed down the decline in thinking and memory skills in people living with early Alzheimer’s disease by 27%.

Shares in the lead company in the Biogen trials, Japan’s Eisai (Eisai Co Ltd), which has also made the last major global breakthrough on Alzheimer’s with a drug that became available in 1997, rallied over 60%. Shares in Swedish company BioArctic AB, from whom Eisai licensed Lecanemab in 2007 and which continues to work closely on research, rose over 280% in the last six months.

Biogen and Eisai’s news also boosted share prices in companies that are currently working on dementia-related neurological decline but which have not recently achieved a major breakthrough such as US pharma giant Eli Lilly [NYSE:LLY].

Biogen’s first mover advantage

While pharma companies across the globe are searching for a solution to memory degeneration, progress in clinical trials has been very patchy. Only two weeks ago Swiss pharmaceutical Roche Holding [ROC.SW] said that the third run of tests on its Alzheimer related drug Gantenerumab didn’t show any significant improvement in patients.

Also, Biogen and Eisai’s initial good news was later marred by a patient’s death, raising questions about the side effects of the new drug.

The search for a solution continues. As Alzheimer’s affects some 50 million people worldwide it is clear that the first mover will have a significant advantage over competitors. When another drug, Aducanumab, was launched in the US last year, the first drug to come on the market in over 20 years, its annual price tag was $56,000. The cost was initially covered by the two US national insurance schemes Medicaid and Medicare, but as the drug ended up facing some questions after the launch, one of the schemes eventually refused to pay out for the treatment.

In the case of Biogen and Eisai’s latest offering, if the two US national insurance schemes agree to pay for the new drug it could attract sales in the region of $13 billion.

Alzheimer’s drugs, like cancer prevention treatments, remain the holy grail of medical research, and companies involved in the R&D are worth keeping an eye on.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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