Eli Lilly to Seek FDA Approval for Alzheimer’s Drug

The FDA decision comes after the agency cleared

Biogen Inc.’s

BIIB -6.11%

Aduhelm, the first Alzheimer’s therapy to receive approval in nearly two decades but one that has drawn criticism from doctors and researchers skeptical the drug works.

Lilly stock climbed more than 7% on Thursday. Many analysts predicted donanemab would be approved, perhaps by the middle of next year, and become a multibillion-dollar seller.

Shares in Biogen, meanwhile, dropped about 6% on concerns the company’s newly approved Alzheimer’s drug could face stiff competition sooner than expected. Both Aduhelm and donanemab target amyloid, a sticky substance in the brain associated with Alzheimer’s.

Donanemab performed better in a trial than Biogen’s drug did in its trials, and health insurers and patients would probably prefer it over Aduhelm, J.P. Morgan analyst

Chris Schott

said in a note to investors.

“Donanemab’s approval would be a major blow to Aduhelm’s commercial prospects,” Brian Skorney, a Robert W. Baird & Co. analyst, said in a research note. “We think it would make zero sense for FDA to approve Aduhelm, but not donanemab.”

Alzheimer’s is a progressive disease robbing people of their memories and cognitive abilities. About six million people in the U.S. have Alzheimer’s, according to the U.S. Centers for Disease Control and Prevention.

Few drugs have been approved to treat the disease, and most merely treat symptoms, rather than slowing its progression.

For years, drug researchers struggled to find effective treatments, and repeat failures drove many companies to abandon efforts. After it encountered disappointing trial results, Biogen ended its exploration of Aduhelm, before taking a closer look at the data and reviving the program.

The FDA encouraged Biogen’s re-examination, according to documents the agency released earlier this week.

In approving Aduhelm, the FDA said the drug reduced amyloid and by doing so should help patients.

Wall Street analysts said the agency’s reasoning bolstered the prospects of donanemab and other experimental drugs targeting amyloid and could open the door to their approval.

Biogen and partner

Eisai Co.

ESALY -2.40%

Ltd. said on Wednesday that the FDA designated their experimental Alzheimer’s drug lecanemab for a speedy review.

The Aduhelm approval, however, has been criticized by many researchers and doctors, who say the amyloid hypothesis is unproven and study data don’t prove the drug works. Some of the critics have said it isn’t worth paying for Aduhelm, which Biogen listed for $56,000 a year.

Statisticians at the FDA also objected to approving Aduhelm, saying there was insufficient evidence, according to the agency’s documents. Since the approval, three members of an FDA panel that advised the agency to reject Aduhelm have resigned in protest.

In January, Lilly said donanemab in a small, mid-stage trial slowed the decline in memory and ability to perform activities of daily living by 32% in subjects who got the therapy after 18 months. The Indianapolis-based company said it will ask for approval based on data from the Phase 2 trial, though it is testing donanemab in a large, late-stage trial.

Write to Laura Cooper at laura.cooper@wsj.com