Lilly stock poised for record if Alzheimer’s drug results shine

Indianapolis-based Eli Lilly and Co. is set to report results from a trial of its experimental Alzheimer’s medicine on Saturday in a move that could boost shares of the year’s already best-performing big drugmaker.

Analysts say the stock is poised for a record if a fresh look at trial data shows additional benefits and the potential for faster approval. Results from a mid-stage study released in January have helped drive the stock’s 21% gain so far this year.

The decades long quest for a lucrative new medicine to thwart the brain-wasting disease has left drugmakers reeling from past missteps. But Lilly’s recent results have once again rekindled hope, even among more speculative biotech drug developers. A positive report could push Lilly’s drug to the forefront of the space and put the company on track for a new blockbuster drug.

This weekend the focus will be on whether secondary goals are met related to a clinical dementia rating and a disease assessment scale. Initial results in January already showed the drug, donanemab, had slowed a composite measure of decline in early Alzheimer’s patients.

Positive news could send shares higher by as much as 10%, while disappointing or mixed data may have a modest impact in the mid-single digits, according to JPMorgan.

Results will be presented at the virtual International Conference on Alzheimer’s & Parkinson’s Diseases meeting on Saturday.

Investors should also keep a close eye on shares of competitors, big and small.

Biogen’s competing aducanumab drug is a few steps ahead of Lilly in getting in front of the U.S. Food and Drug Administration. Its mixed results were panned in November by a panel of outside experts. However, the agency isn’t required to follow the committee’s advice.

Some on Wall Street have speculated that positive data from Lilly could take some pressure off the FDA to approve Biogen’s more controversial drug. But, Mizuho analyst Vamil Divan said the agency considers each application individually. For Lilly, if the mid-stage data is good enough to file for regulatory approval, it could send Lilly to a record $240 per share, he said.

Lilly shares traded at $202.64 early Friday afternoon, down 1.2%.

Elsewhere, positive results could bode well for a handful of would-be small-cap competitors like retail trading favorite Cassava Sciences Inc. The former penny stock has rallied nearly 700% this year on results from a small 100-person study.

“With Alzheimer’s we still don’t know exactly what’s causing the problem or when to intervene,” Divan said. “As we answer some of these questions it bodes well for all other companies looking at Alzheimer’s and the space will see more investment.”

Lilly ran into controversy earlier this week when Reuters published a report about a former human resources executive who alleged company officials tried block her efforts to sound alarms about problems at a Lilly drug factory that makes Trulicity. The report appeared to have little to no negative impact on Lilly’s stock price.