This Alzheimer’s drug slowed cognitive decline in some patients. Analysts say it could become a blockbuster hit.

• Biogen and Eisai just released the full phase 3 data of a new Alzheimer's drug, lecanemab.
• The medication slowed the rate of cognitive decline by 27%, with some side effects.  
• The study rests upon a controversial hypothesis around the disease. 

Alzheimer's disease affects roughly 6.5 million Americans — and there is no cure. 

It's a complicated, debilitating illness and drug companies have struggled for years to come up with viable treatments. 

A recent study of a new Alzheimer's treatment may help companies and doctors determine whether a key hypothesis underlying years of treatments is worth investing in. On Tuesday November 29, Biogen and Eisai released long-awaited full phase 3 study data of the drug the two companies are developing, called lecanemab. The study confirmed previous news that the drug slowed the rate of cognitive decline in Alzheimer's patients by 27%. It also came with some side effects, including infusion-site reactions, and brain swelling in about 13% of patients. Analysts say that this positive result could lead to it becoming a blockbuster drug for the companies.

The long-awaited results come from Biogen, a Cambridge-based biotech company focused on neurological diseases, and Eisai, a Japanese pharmaceutical company that focuses on developing drugs for cancer and brain diseases. Biogen previously developed an Alzheimer's drug called Aduhelm, which was approved by regulators in 2021, but flopped commercially after providers and insurers pushed back against prescribing the drug due to mixed results in clinical trials.

Now, lecanemab could pave the way for the validity of a hypothesis that's been a source of controversy in Alzheimer's research for years.  

Lecanemab's mild success comes after a string of Alzheimer's treatment failures

At the center of the science behind the drug is the amyloid hypothesis: a decades old theory that says the accumulation of beta-amyloid, or proteins also called Aβ clumps, in the brain could be responsible for Alzheimer's. These clumps build up in the brain and are thought to eventually kill brain cells, leading to the progression of the disease. 

A smattering of biotech companies focused on Alzheimer's treatment have used this theory to develop drugs that work to block the effects of these proteins on the brain. But amid the growing skepticism around the amyloid hypothesis, coupled with a series of failed drugs from companies like Eli Lilly and AstraZeneca, Pfizer, and Roche, the results from Biogen and Eisai's Phase 3 study set the stage for the future of the field.

Lecanemab has been shown to successfully remove beta amyloid from the brain, but Biogen's study was expected to "either confirm the hypothesis…or make it even more questionable if the data are poor," Cowen analyst Phil Nadeau told Insider.

The late stage study included 1,795 participants who either received lecanemab or a placebo and were surveyed over the course of 18 months to see if the drug could slow the cognitive decline associated with Alzheimer's. The drug is geared toward treating those in the early stages of the disease.

Nadeau predicts a modest decline in Biogen's revenue over the next few years due to competition in other drug areas, so a blockbuster success for the company, such as FDA approval of lecanemab, will be important to drive revenue growth. Insider reached out to Biogen for comment, who deferred lecanemab-related questions to Eisai.

But since the study showed promising results, lecanemab could take over roughly 11% of the Alzheimer's disease market three years after its launch, Nadeau wrote in a recent analyst note, which would translate into more than $3 billion in annual revenue from the drug.

Previously, some believed the probability of a successful study was low. Physicians surveyed at Cowen's annual health conference in March estimated a 36% probability that lecanemab succeeds. 

In a July note to investors, analysts at Needham predicted lecanemb had a 43% chance at being a successful Alzheimer's treatment. 

If the trial had been negative, that wouldn't have been the end of the amyloid hypothesis

Negative results, which would have illustrated that the drug failed to reduce the severity and progression of Alzheimer's over an 18 month period, wouldn't necessarily have meant the end of the companies working on similar treatments, Nadeau said. 

Other big drug companies such as Roche Holdings and Eli Lilly are pursuing similar treatments, with results expected to come later this year and early next year, respectively.

"I think people's confidence in the amyloid hypothesis would go down even further, but ultimately people would wait to see what those other data events show," he said. 

Negative results might have given a boost to companies that are exploring alternate ways to treat Alzheimer's disease. As the amyloid hypothesis has garnered increasing scrutiny, a handful of biotech companies have begun to turn to different strategies, like gene editing, to find better treatments for the disease. And though Biogen's drug is furthest along in development, it's far from being the only treatment being tested for Alzheimer's. According to a recent report from Fierce Biotech, there are 143 drugs targeting the disease across 172 clinical trials.

The positive result may mean a blockbuster financial success and a redemption arc for the hypothesis

The study had a positive result, meaning it could be a sorely-needed blockbuster success for Biogen.

But a key hurdle that lecanemab will have to face is the Centers for Medicare and Medicaid Services (CMS), which oversees more than 100 million people on Medicare and Medicaid. Biogen's Aduhelm faced intense scrutiny from CMS, which has the right to take a second look at drugs that have received accelerated approval from regulators, a status that both Aduhelm and lecanemb have received from the Food and Drug Administration. Today, CMS only covers Aduhelm for patients in clinical trials, meaning those who want the drug in real life will have to pay for it fully out of pocket — to the tune of $28,200 each year. 

So there is still a chance that the drug may be approved by the FDA yet still fail to receive adequate reimbursement from Medicare, Nadeau said.

Eisai CEO Ivan Cheung told Insider that its trial with Biogen on lecanemab is designed to give both patients and the larger medical community a "definitive" answer around whether the drug truly works.

"There shouldn't be a lot of interpretation" around whether the drug should be approved for wide use to treat patients, he said.