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Lilly's (LLY) AD Candidate Gets Breakthrough Therapy Status

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Eli Lilly (LLY - Free Report) announced that the FDA has granted the Breakthrough Therapy designation to its Alzheimer's disease (AD) candidate, donanemab. The company plans to submit a biologics license application (BLA) seeking accelerated approval for the candidate for treating AD later this year.

Please note that the Breakthrough Therapy designation is granted to medicines being evaluated for serious conditions where early clinical evidence indicates the potential for substantial improvement over available therapy. This designation increases the likelihood of a potential approval of donanemab, which has demonstrated promising results in a mid-stage study.

Moreover, the FDA’s accelerated approval of Biogen’s (BIIB - Free Report) controversial AD drug, Aduhelm (aducanumab), earlier this month has boosted investors’ confidence in other investigational candidates in the highly challenging area of AD. Aduhelm is the first medicine to be approved to reduce the clinical decline associated with this devastating disease by removing amyloid beta in Alzheimer’s patients. The drug is estimated to generate peak sales in the range of $3-6 billion. Aduhelm is expected to meaningfully change the course of AD treatment.

We remind investors that the AD field has seen several failures with a number of large pharma companies, including Eli Lilly, Roche, Amgen (AMGN - Free Report) , Novartis (NVS - Free Report) , Merck, Pfizer, and AstraZeneca, which stopped the development of their AD candidates in the last few years either due to the low possibility of success or safety concerns.

Amid these positive sentiments for AD drugs, Lilly’s shares were up 7.3% on Jun 24 following the Breakthrough Therapy status. In fact, its shares have gained 37.5% so far this year compared with the industry’s growth of 6.7%.

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We note that donanemab works in a similar fashion to Aduhelm by targeting beta amyloid in AD patients. Data from a mid-stage study — TRAILBLAZER-ALZ — announced in January demonstrated that donanemab slowed disease progression significantly by 32% compared to placebo in patients with early symptomatic AD. The company plans to file the BLA for the same based on data from this study. The company is currently evaluating the candidate in the phase III study, TRAILBLAZER-ALZ 2. Meanwhile, another phase III study in asymptomatic Alzheimer's disease is expected to start later this year.

Meanwhile, a few smaller biotech companies are also engaged in the development of Alzheimer's disease drugs. These stocks also hold potential to gain, going forward, with encouraging candidates in their pipeline targeting AD.

Zacks Rank

Lilly currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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