There’s a New Alzheimer’s Drug on the Market — These Are the Healthcare Stocks to Watch

Key Takeaways

• On Thursday, the FDA approved Leqembi, the first drug that treats the cause of Alzheimers
• The drugmakers’ stocks fell following the announcement
• Investors are likely waiting to see how things play out with Leqembi

An estimated 6.7 million Americans age 65 and older are currently living with Alzheimer’s. On Thursday, the FDA approved a new Alzheimer’s drug, Leqembi, which has been shown to slow the progress of the disease.

Despite the approval, questions remain about the drug’s affordability and side effects. Eisai and Biogen, the drugmakers, saw their stock fall after the announcement — not exactly the celebration you might expect.

We’ll take a closer look at the new drug and Wall Street’s reaction to it below.

Sometimes the stock market just doesn’t react the way you think it might. That’s why it pays to play it safe with some of your portfolio. Q.ai’s Value Vault Kit leverages the best U.S. large-cap stocks, seeking low-risk stocks with consistent growth potential.

Download Q.ai today for access to AI-powered investment strategies.

What’s the deal with this new drug?

Leqembi is a joint effort between Japanese drugmaker Eisai and U.S.-based drugmaker Biogen. The drug works by targeting beta-amyloid, a protein in the brain, thought to be one of the underlying causes of Alzheimer’s disease.

Importantly, Leqembi is not a cure for Alzheimer’s, but it can “give people in the early stages of Alzheimer’s more time to maintain their independence and do the things they love,” according to Joanne Pike, president and CEO of the Alzheimer’s Association.

Patients on Leqembi must keep receiving infusions indefinitely, and it’s currently priced at about $26,500 for a typical year’s worth of treatment. After meeting their deductible, Medicare enrollees will pay a co-payment of 20% of the cost of the drug.

Potential side effects range from headaches to brain swelling and bleeding, so the drug is not without risk.

Also in Alzheimer’s news this week: Donanemab, an experimental drug from Eli Lily, might be even better at slowing down the disease than the just-approved Leqembi. We’ll keep an eye on that approval process in what is turning out to be a big year for Alzheimer’s treatment.

How did investors react?

Wall Street’s reaction to the FDA approval wasn’t enthusiastic. Shares of both Biogen and Eisai fell on Friday: Biogen stock was down more than 2% and shares of Eisai trading in Japan fell more than 4%.

The tepid response can be attributed to a few factors.

First: Eisai and Biogen experienced an unsuccessful rollout of Leqembi’s predecessor, Aduhelm, so investors are a little wary this time around. Other concerns include the drug’s cost and accessibility, potential side effects over the long-term, and FDA testing requirements to identify those higher at risk for serious side effects.

But there’s upside to be found elsewhere. JPMorgan noted that UnitedHealth (UNH) and CVS (CVS) are likely to see the most upside because both operate home infusion businesses, which could help address the access issue.

The bottom line

There’s a lot of uncertainty around new, more experimental drugs. We’ll have to see how the market reacts to the drugmakers, specifically, but the market for patient access is a space to watch in the near-term.

For something a little more certain, leverage our AI to invest in the best U.S. large-cap, low-risk stocks with the Value Vault Kit.

Download Q.ai today for access to AI-powered investment strategies.