FDA delays approval deadline for Eli Lilly's Alzheimer's drug

Food and Drug Administration (FDA) officials delayed the approval decision deadline for Eli Lilly's (LLY) Alzheimer's drug, donanemab, as regulators carefully examine how the new treatment will compete and compare to other offerings in its drug class.

Yahoo Finance Health Reporter Anjalee Khemlani helps explain.

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JULIE HYMAN: Another mover that we're watching Eli Lilly, it's facing a setback. Thanks to the Food and Drug Administration. The FDA is pushing back its approval decision deadline for the drugmaker's experimental Alzheimer's treatment.

And so we see the shares fall back on that. And this is something that was not expected here. And it had some other setbacks as well for this particular drug. So this is just the latest.

We're seeing the shares fall. It's not a huge decline. A lot of analysts are saying, well, you know, Eli Lilly, this is not why people are necessarily buying Eli Lilly shares right now. They're looking at the GLP 1 story. But nonetheless, this was something that had potential to add to the sales.

JOSH LIPTON: Yeah, I saw a company execs seemed like kind of talking to the press here saying the decision to hold this hearing now. Unexpected was a word they used, unusual. It doesn't seem like we know much about why the FDA decided to convene the panel now, although you're seeing some speculation about what it might be about.

JULIE HYMAN: Well, let's bring in someone who has some color on this because she has been watching this very carefully. Our Anjalee Khemlani. So what gives with this.

I mean, we know that this class of Alzheimer's drugs has faced setbacks in the past, notably the Biogen drug that they put forward Aduhelm. Is this a similar drug to that? Does it face some similar issues?

ANJALEE KHEMLANI: Yeah, I was going to say, I have the answer to that. I was to interject.

JOSH LIPTON: Good thing Anjalee is here.

ANJALEE KHEMLANI: Yeah. So, yes, it is the class of drugs that is a concern for the FDA because we've seen the side effects that result from these drugs. And so while not-- but Lacombe Biogen's drug is already on the market. They're looking at how this competes and how it compares.

So they're looking at the safety data. They want to take a look at all of that it's important to note that this drug don't-- oh, my gosh I knew I was going to mess it up. Donanemab is the one that is intravenously delivered. And that is also how Lacombe comes in.

So this is where the competition kind of sets up because Biogen is waiting to release a subcutaneous that goes in the muscle like an injection next year. So this really decreases the ability for Lilly to compete in the space. That's where the concern is for investors right now.

It does have on the plus side 35% of slowing progression in the disease. And analysts did say that they were expecting sort of a smaller buildup for the company in terms of sales this year, 30 million about from this drug. But next year was supposed to be sort of a bigger push for it with $450 million expected.

Does this then reduce this year's? For sure, yes, because we don't know what date has been set for this meeting as well for the outside advisors to look from the FDA. But then also for next year, what does it look like?

JOSH LIPTON: Some folks say to, Anjalee, I was seeing that what this could mean is that it increases the chances of a more complicated label. Why is that important?

ANJALEE KHEMLANI: Well, that's important because then it reduces the patient population, right? It's going to increase how strict doctors are in prescribing it and who gets access to it based on what the known side effects are, who is least qualified.

They look at the buildup of plaque, right? That's the target of this type of treatment. That's the class of treatment you were talking about, Julie.

And so that's where there's been this buildup of concerns. We saw that struggle with Aduhelm. Lacombe's been really slow to roll out as well.

And so it's not really a big moneymaker. Eli Lilly, to your point, was supposed to have these two things in the bag for this year, right? They were supposed to have the GLP 1.

They were supposed to have as well. This drug for this year coming in granted playing a smaller role, but still was supposed to be part of that story. And so now, a little bit of a setback there.

But still the GLP 1 is really skyrocketing. So that covers any larger impact. I think they're kind of covering the loss there with this.

JULIE HYMAN: Yeah, a bit of a cushion for Eli Lilly.

ANJALEE KHEMLANI: Very nice big cushion.

JULIE HYMAN: Yeah. Anjalee, thank you so much. Appreciate it.