Why the FDA didn’t grant an approval to Lilly’s Alzheimer’s drug

Eli Lilly & Co.
LLY,
-1.46%
now plans to seek full approval of its experimental Alzheimer’s disease treatment after the Food and Drug Administration refused to grant a speedier approval using less rigorous clinical data.

Lilly announced the FDA’s complete response letter and its new plans late Thursday night. Its stock was down 1.7% in premarket trading on Friday.

Why the FDA made its decision

The FDA told the drugmaker that it wanted to see clinical data from at least 100 patients with early symptomatic Alzheimer’s disease who had taken donanemab for a year. Lilly said that “many patients” included in the Phase 2 clinical trial stopped treatment as early as six months due to the “speed of plaque reduction.”

No other issues were cited in the FDA’s complete response letter.

The fuller data set that the FDA is seeking is expected to come in the second quarter of this year when Lilly plans to share the readout from the ongoing confirmatory Phase 3 clinical trial. The company said it expects to seek full approval in the first half of 2023.

“Patients and physicians will be well served by having the full Phase 3 data available alongside our Phase 2 data when they need to make treatment decisions,” Anne White, president of Lilly Neuroscience, said in a statement. 

What is accelerated approval? 

This is a special type of regulatory approval that allows the FDA to more quickly OK drugs that treat serious, unmet conditions or demonstrate an obvious, meaningful benefit over existing therapies.

The pathway was created in the early 90s in response to the HIV/AIDS epidemic

When accelerated approval is granted, pharmaceutical companies are still responsible for conducting what are called confirmatory Phase 4 clinical trials. However, there have long been concerns about the accelerated approval process. According to the Commonwealth Fund, confirmatory trials can take too long, the prices for these therapies are sometimes too high when they have not yet proven their value, and some drugs that receive accelerated approval turn out not to be better than existing therapies. 

In the Alzheimer’s disease space, accelerated approvals present another concern. The Centers for Medicare and Medicare Services last year issued a rule that requires patients to participate in clinical trials for amyloid plaque-clearing treatments if the treatment received accelerated approval.

That rule limited access to Eisai
4523,
+2.79%
and Biogen’s
BIIB,
+1.56%
Aduhelm, an Alzheimer’s treatment with a controversial back story and unclear clinical benefit that received accelerated approval in 2021. 

Does the delay affect Lilly’s position in the nascent Alzheimer’s market?

Eisai and Biogen just received accelerated approval for Leqembi, another Alzheimer’s drug that will compete with donanemab if and when that drug is approved. (The companies are planning to seek full approval of Leqembi.)

The delay in donanemab’s approval has been viewed as positive for Eisai and Biogen by Wall Street. Biogen’s stock was up 1.7% in premarket trading on Friday, while U.S.-listed shares of Eisai gained 0.7%.

“We now anticipate a slight delay for donanemab to potentially enter the market (now in 2024), but ultimately the CMS revisiting the currently restrictive [national coverage determination] to procure broader reimbursement will be the major hurdle to overcome for the anti-amyloid drug class,” William Blair analysts told investors on Friday.

How will the delay affect Lilly’s financial performance?

The company said there will be no change to its guidance for 2023. Lilly is set to present its fourth-quarter earnings on Feb. 2. 

Its stock is up 44.4% over the past year, while the broader S&P 500
SPX,
+0.52%
has declined 14.0%. 

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