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Eli Lilly inches higher premarket after FDA advisory panel backs Alzheimer's drug

June 11, 2024 8:33 AM

Investing.com -- Shares in Eli Lilly (NYSE: LLY) edged higher in premarket U.S. trading on Tuesday after an advisory panel to the U.S. Food and Drug Administration (FDA) voted that the benefits of the drugmaker's experimental Alzheimer's medication outweighed its risks.


The drug, known as donanemab, was found to be effective in helping patients suffering from the early stages of the disease, a brain disorder that can cause memory loss over time.


In a key decision, the panelists widely agreed that testing for tau, an Alzheimer's-related protein that is associated with brain cell death, should not be a barrier to approving the drug. Lilly's tests had excluded patients with low to no levels of tau from its key trial of donanemab.


Following the vote, the FDA now has a clearer pathway to giving its final approval to the treatment, which had been tipped to come earlier this year but was delayed when the regulator asked for input from its independent panel of experts.


Analysts at Wells Fargo noted that, because the panel's vote was unanimous, it is now "likely" donanemab will receive FDA approval. However, the agency is not under any obligation to follow the panel's advice.


Should donanemab be approved, analysts at Bank of America Securities said they expect the drug to be similar to Eisai and Biogen (NASDAQ: BIIB)'s Leqembi. They reiterated their "Buy" rating of Eli Lilly's stock, adding that the panel's decision supports a "robust new product cycle."

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