Could an Alzheimer’s breakthrough herald a major new market for biotech?

Key points

• A new drug to treat Alzheimer’s disease has shown positive results in clinical trials
• This could be the start of a new wave of treatments and further investment in R&D
• The size of the potential market creates potential new investment opportunities

A successful trial of a new Alzheimer’s drug heralds a breakthrough in the treatment of the disease – and could signal the start of one of the potentially largest markets within biotech.

Japanese pharmaceutical company Eisai and US biotech Biogen presented positive results from their latest clinical trial for lecanemab, a drug that can slow the progression of Alzheimer’s disease¹ – a brain disorder that causes progressive problems with memory, speech, mobility and, eventually the ability to carry out even simple tasks.

This is significant, for several reasons. It is the first time that any drug has consistently demonstrated success in slowing the decline of brain function caused by Alzheimer’s in well-controlled clinical trials, by around 27% after 18 months.² This should allow patients more time to spend with their loved ones and to live independently – and will also reduce the burden on healthcare systems.

Alzheimer’s disease along with other types of dementia is the seventh most common cause of death globally.³ While it is related to ageing – affecting one in 14 people over the age of 65 - around one in every 20 people with Alzheimer’s disease are under the age of 65.⁴

The global societal cost of dementia, including Alzheimer’s disease, is estimated to be around $1.3trn, with around half this amount due to the economic value of unpaid informal care.⁵  The cost is likely to increase as the global population ages - around 55 million people worldwide have dementia, and the number is expected to increase to 139 million in 2050.⁶

Potential for rapid take-up

Eisai and Biogen have submitted lecanemab to the US Food and Drug Administration for approval, with a decision expected by 6 January. The data presented by Eisai on 29 November appears robust, likely giving the drug a good chance for approval in our view. However, equally important will be ensuring the right patients can access the drug, and in the US this will require coverage under the Government’s Centers for Medicare and Medicaid Services (CMS).

Coverage for Biogen and Eisai’s previously developed Alzheimer’s drug Aduhelm, approved in the US in 2021, was restricted commercially. Aduhelm reported one positive and one negative Phase III trial, which made the drug’s approval controversial. The data presented so far suggests a much more consistent benefit from lecanemab, so many will be hoping for a broader coverage decision.

We think the strength of the clinical data and the way it has been positively received by patient advocacy groups, such as the Alzheimer’s Society, makes a compelling argument for improved patient access to this class of therapy.⁷ And given the sheer number of patients with Alzheimer’s disease and the lack of other treatments available, if lecanemab is approved and covered by CMS, we believe the uptake – and potential for sales - will be robust. Biogen and Easai are also aiming to file for full approval in Europe and Japan by the end of March 2023.⁸

The start of a new wave

This could be the start of a new wave of Alzheimer’s treatments, as success in one type of drug indicates that such medicines are possible – encouraging other firms to innovate further. We have seen this in other areas such as immuno-oncology, where for example Opdivo, a drug that stimulates the body’s immune system to fight cancer cells, was followed by the development of new treatments for cancer using immunotherapy.

Eli Lilly is awaiting clinical trial results of a similar drug to lecanemab, anticipated in mid-2023. We expect that the positive news on lecanemab, and Eli Lilly’s drug if it is also successful, could encourage more research and investment into this area, potentially resulting in both new treatments for patients and new opportunities for investors.

The world’s population is ageing – the share of the global population aged 65 and over is expected to rise from 10% this year to 16% in 2050.⁹ This means the overall healthcare market is likely to grow, with a significant increase expected in diseases linked to ageing, such as Alzheimer’s and dementia, alongside chronic ‘lifestyle’ diseases such as heart disease and obesity. This is a long-term structural shift in demographics and lifestyles, that supports the long-term fundamentals of the biotech sector.

The creation of the first drug to successfully treat Alzheimer’s is a gamechanger for patients, and this area of medicine, even if we are still a long way from a cure. But it could mean a major new market for biotech companies that should continue to support the long-term growth of the sector, and create exciting new opportunities for investors.

References to companies are for illustrative purposes only and should not be viewed as investment recommendations.