The exciting news that Biogen (BIIB) has gotten a new drug approved to treat Alzheimer's disease has been overshadowed by concerns about its effectiveness, as well as its startling US$56,000-per-year cost. Also missing among the headlines is mention of Biogen's Japanese partner on the drug, Eisai (ESALF) .
Japanese investors have noticed. Eisai (T:4523) shares jumped another 16.3% on Wednesday in Tokyo trade after a 19.3% leap on Tuesday. The company is perfectly placed to benefit from huge demand from the graying not only of Japan but Asia in general.
At 48.6 years old, Japan has the highest median age among major nations, second behind only the principality of Monaco (55.4), which as a tax haven attracts wealthy people in later life. Japan's population on the other hand is huge, at 124.7 million, similar to Mexico. Of those, 36.6 million are already over the age of 65, almost one-third of the population, a proportion that's climbing.
The U.S. Food and Drug Administration on Monday approved the drug, aducanumab, with reservations. The drug will be marketed under the brand name Aduhelm. It's the first new Alzheimer's treatment since 2003, and is the first drug ever to target the mechanism thought to cause Alzheimer's, rather than merely the symptoms.
The new drug works to target abnormal proteins, peptides known as amyloids, that are produced in bone marrow. They can get deposited in the brain and ultimately form a protein plaque. The sticky precursor beta-amyloids also seem to cause problems while accumulating, before they can form a plaque.
Eisai first joined forces with Biogen in 2014 to co-develop Alzheimer's drug candidates. Eisai exercised an option in October 2017 to develop and promote aducanumab alongside its U.S. partner. The drug was in Phase 3 trials at the time, and Eisai agreed to fund some of that research, including 45% of costs from January 2019 onwards.
Eisai will get 80% of profits in Japan as well as Asia ex-China and South Korea. Biogen will receive 55% of the profits in the United States, and 68.5% of profits from Europe. The partners split profit from the drug in the rest of the world, 50-50. The drug is under review in Japan, the European Union, Canada, Australia and Brazil.
The share price movement has taken Eisai stock to ¥10,755, although Nomura believes it can progress to ¥18,000. Given the certainty of U.S. sales to come and the increased likelihood of sales in Japan and Europe, Nomura increased its estimate for global sales of the new drug for Biogen and Eisai combined to ¥480 billion (US$4.4 billion), up from ¥270 billion (US$2.5 billion).
The Japanese brokerage notes that approval of aducanumab is a "judgment call, in our view." Aducanumab was given "accelerated approval" due to the seriousness of the condition it treats, and the unmet need it serves. Around six million Americans are living with Alzheimer's now, and 30 million globally, numbers projected to double by 2050. Still, an FDA advisory panel wasn't convinced that the research was enough to go on.
The reservations stem from the fact that one of the two Phase 3 trials for the drug did not produce a cognitive improvement in patients. The other was inconclusive until Biogen said further data had come in, showing a delay of 22% in mental decline. Both trials "very convincingly reduced" the level of the problematic amyloid proteins in the brain, the FDA notes, which should prevent cognitive decline. So it has taken that biomarker as a likely indication of future improvement.
Biogen will have to continue a post-approval Phase 4 study to confirm the drug's effectiveness on cognition - the FDA reserves the right to reverse its approval if the drug doesn't deliver on its promise. Not all doctors are sure that amyloid proteins cause Alzheimer's, instead of just being present, and other drugs that reduce amyloid buildup have also struggled to prove their effectiveness.
Still, there's sure to be huge demand, from a disease that's hard to study. Patients latch onto any promise of improvement, doctors note. Nomura estimates that with rebates and co-payments, the drug will likely cost patients US$30,000 each year. The companies have promised that treatment will be free if the drug doesn't work in a patient, although it's not clear how that pledge will work.
Biogen's partnership with Eisai extends to other drugs. It also shows how uncertain drug development can be, even for promising candidates.
In 2019, they scrapped further work on the Eisai drug elenbecestat, which had also entered Phase 3 trials, believing the risks behind the drug outweighed its benefits. Although there was a small reduction in the amyloid proteins in the brain, there was no significant improvement in cognitive scores for patients who had taken the drug for two years.
Work continues on Phase 3 clinical trials for another Eisai drug to treat Alzheimer's, BAN2401, developed from research originally licensed from the Swedish company BioArctic. One of two Phase 3 trials now under way is backed by the National Institutes of Health. The drug has the same underlying mechanism as aducanumab.
Still, the chance of BAN2401 coming to market are still 50-50 at best. In fact, Nomura has raised its forecast of success for BAN2401 to 40%, up from 30%, on the back of the new FDA approval of its stable mate. Biogen and Eisai are splitting the costs for BAN2401, and would also split profits evenly.
While it's promising that Eisai and Biogen have just seen one Alzheimer's drug approved, the fact that the FDA has given the green light to a new treatment based on an unmet need may make it harder for additional drugs to win approval. The BAN2401 Phase 3 research "will need to demonstrate unambiguously positive results," Nomura's Japan pharmaceuticals analyst, Motoya Kohtani, writes in a note to clients.
Should BAN2401 come through its trials, it could win from patients switching to use it, and away from aducanumab. BAN2401 has the advantage that it can be used at maximum dosage immediately, whereas aducanumab needs the dose to be increased gradually. BAN2401 also has a lower incidence of side effects, specifically cerebral edema, a buildup of fluid on the brain. That's a result of other amyloid-targeting drugs, too, and managed with brain scans.
BAN2401 should conclude one Phase 3 trial in Q3 2022. Roche (RHHBY) and Eli Lilly (LLY) have competing drug products for Alzheimer's that also target amyloid plaques. A Phase 3 trial for the Lilly drug should wrap up in 2023. Roche is reformulating its drug after a Phase 3 trial was halted when it produced no cognitive improvement in patients.
It was a full 25 years ago that Eisai won FDA approval, in 1996, for its first Alzheimer's treatment, a drug called donepezil, sold under the brand name Aricept. Eisai teamed with Pfizer (PFE) to market that best-selling drug, which is old enough to now be available in generic form. The drug treats some symptoms of Alzheimer's but, unlike newly approved aducanumab, does not work to counteract the progression of Alzheimer's by arresting the underlying process thought to cause cognitive decline.