On Friday the FDA granted conditional approval for a new Alzheimer's drug called Lecanemab, monoclonal antibody being co-developed by Eisai Co. and Biogen (NASDAQ: BIIB).

The drug, which will be sold under the brand name Leqembi, is the first in a new class of treatments that may slow cognitive decline caused by Alzheimer's.

It works by reducing levels of amyloid, a sticky protein, in the brains of people with early-stage Alzheimer's. While the drug has shown clinical benefits in a recent study, its effects are modest and it carries a risk of side effects such as brain bleeding and swelling.

"The approval of LEQEMBI provides new hope to patients with Alzheimer's disease. Patients at an early stage of the disease and their caregivers can now consider a new treatment option with their doctors. Our focus now is on the path forward, working alongside Eisai with the goal of making LEQEMBI available to patients who may benefit from this treatment as soon as possible," said Christopher A. Viehbacher, President and Chief Executive Officer of Biogen.

Late Friday night the companies reported they had submitted a supplemental biologics license application to the FDA, hoping to gain traditional approval of Leqembi.

Eisai and Biogen plan to sell the drug at a price of $26,500 per year for the average patient, with it becoming available commercially on January 2023.

However, a preliminary report from the Institute for Clinical and Economic Review, a nonprofit that works with drugmakers and insurers to evaluate drug prices, suggested a fair price would be in the range of $8,500 to $20,600 per year.

Despite this, the high cost of the drug means that it is likely to be out of reach for most patients in the near-term.

This is due to a decision by Medicare in April 2022 to deny routine coverage of such drugs. Under current rules, patients must be enrolled in approved clinical trials in order to have the drug paid for, but there are no ongoing or planned studies according to Eisai.

While lecanemab is the first drug to show clear clinical benefits in a recent study by reducing amyloid levels, it is not a cure for Alzheimer's. The disease slowly robs people of their memories and ability to carry out everyday tasks, and current treatments can only alleviate symptoms rather than targeting the underlying causes.

Researchers have been searching for treatments that can slow the progression of the disease for decades. In June 2021, the FDA granted early approval to another anti-amyloid drug called Aduhelm, developed by Biogen and Eisai. However, the decision was controversial due to the mixed results of the drug in two large studies that were ended early by Biogen.

Eisai's study of Leqembi, on the other hand, was well-run and showed benefits across nearly all measures analyzed, according to David Knopman, a neurologist at the Mayo Clinic.

He was critical of the FDA's approval of Aduhelm. Eisai plans to seek full approval for Leqembi based on a recently completed study showing that it slowed disease progression by 27% compared to a placebo.

The drug is expected to delay the worsening of the disease by around five months over 1.5 years of treatment.

Despite the modest benefits of the drug, its approval is being seen as a win in the search for new Alzheimer's treatments and could mark the start of a transformation in treatment for the disease in the US.

Shares of Biogen traded higher on the news by 3.73% during Friday's trade session to close at $281.71 per share. Shares of Biogen trade on the NASDAQ under the symbol BIIB. For more information visit www.biogen.com.