How the FDA’s Approval Of A New Alzheimer’s Drug Could Ripple Across the Biopharma Sector

In potentially the largest biotech event of this year, the FDA has approved Biogen’s aducanumab, an Alzheimer’s drug. RBC Capital Markets’ equity research analysts outline how this much-anticipated decision may have far-reaching effects for the industry.

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By Brian Abrahams, Greg Renza, Luca Issi and Kennen MacKay
Published June 18, 2021 | 2 min read
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Required Disclosures and Disclaimers

The approval of aducanumab marks the first new treatment for Alzheimer’s for more than 17 years, a disease which affects 6.2 million Americans and many millions more worldwide. The drug is the first of its kind, aiming to clear out the amyloid plaques on the brain that some researchers believe is the root cause of the disease.

The accelerated pathway to approval

The FDA granted full approval through its accelerated approval pathway, which can be used for a drug for a serious or life-threatening illness that provides a meaningful therapeutic advantage over existing treatments. Accelerated approval can be based on the drug’s effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit to patients, with a required post-approval trial to verify that the drug provides the expected clinical benefit. The agency believes that this pathway can bring therapies to patients faster while spurring more research and innovation.

Regulatory reverberations

It's impossible to say for now what the ultimate opportunity for the drug, or its impact on Alzheimer’s research and drug development, will be. But this approval does say something about regulatory interactions in the biotech sector.

“We believe the Aduhelm approval, leveraging the accelerated approval pathway, generates new perspectives and questions on current (and future) programs under development, setting the stage for companies to see new, more efficient paths to market,” says Dr. Gregory Renza, Senior Analyst of Biotechnology Equity Research at RBC Capital Markets.

“On one hand it exemplifies a now more permissive FDA stance while on the other, it also challenges the dealings of past regulatory moves that may have pressured other programs. That said, for many, the read-through is one of hope, namely to the broader neurodegenerative space where a precedent on openness to new therapeutic options has been set.”

Potential positives for neuropsychiatry and gene therapy

Not only does the approval have potential positive effects for Alzheimer’s research, but it may also spur more innovation in other neurology and psychiatry products for which the accelerated pathway could offer more success. That potential also reads through into the possibility for greater interest around M&A for assets in the neuropsychiatry space.

Luca Issi, Senior Biotechnology Analyst at RBC Capital Markets, also sees improved prospects for innovative gene therapies seeking approval. Here too, the FDA’s willingness to approve drugs on surrogate biomarkers and limited outcomes could benefit the sector.

Our analysts across the sector suggest that this may signal a more constructive FDA after months of multiple setbacks. But whether the agency ultimately proves to be more lenient remains to be determined.

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