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Biotech shares soar as Biogen drug approval stokes optimism

The approval of Biogen’s new Alzheimer’s disease treatment spurred broad gains in the sector, driving the Nasdaq Biotech Index up to its highest level in more than a month.
The approval of Biogen’s new Alzheimer’s disease treatment spurred broad gains in the sector, driving the Nasdaq Biotech Index up to its highest level in more than a month.Michael Nagle/Bloomberg

The approval of Biogen’s new Alzheimer’s disease treatment spurred broad gains in the sector, driving the Nasdaq Biotech Index up to its highest level in more than a month.

Shares of Eli Lilly & Co. jumped as much as 13 percent and touched a record high, while Biogen’s partner in Japan, Eisai Co., gained as much as 56 percent. Small-cap companies working on treatments for the disease also climbed: Cassava Sciences Inc. surged 19 percent, while Annovis Bio Inc. gained 31 percent.

The Nasdaq Biotech Index was 2.6 percent higher at 12:17 p.m. in New York to its highest level since April 29. Traders viewed the approval as a precedent-setting event which could signal the Food and Drug Administration’s stance on other new medicines, not just those tied to the brain-wasting disease. Biogen’s drug will be commercially available as Aduhelm.

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Lilly, which is working on its own Alzheimer’s medicine, donanemab, traded as high as $227.40.

The approval “suggests Eli Lilly may be able to revisit its decision on the filing of donanemab, given its strong effects on brain amyloid levels,” Bloomberg Intelligence analyst Sam Fazeli wrote in a note. It could also bode well for Roche’s gantenerumab, he said.

The label for Biogen’s medicine was even broader than most on the Street were expecting, though some were still negative on the trial results that led to the approval. “Unmet need wins over science as the FDA finds a way to approve the drug,” Citi analyst Mohit Bansal wrote in a note to clients.

Bansal expects Biogen shares to reach about $410 when the stock resumes trading on Monday, a 43 percent increase from Friday’s close.

The decision on Aduhelm is one of three big catalysts for the sector that analysts have been saying could turn around flagging sentiment. Investors will now be awaiting results from a Vertex Pharmaceuticals Inc. study as well as another Biogen update. Next up for Biogen will be the release of data on a drug for depression developed with partner Sage Therapeutics Inc.

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