Shares of the Japanese pharmaceutical company Eisai Co. (JP:4523) plummeted today after the European Union (EU) rejected its Leqembi treatment for early Alzheimer’s disease (AD), citing safety concerns. The EU’s decision, which came out on Friday, stated that the drug’s minor benefit in slowing cognitive decline did not offset the risk of severe brain swelling. The decision came as a major blow to Eisai’s global sales expansion plan for Leqembi.
Don't Miss our Black Friday Offers:
- Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Eisai shares declined by 13% in today’s trading session. Year-to-date, Eisai stock has lost almost 20% in trading.
Eisai plans to request a re-evaluation of the EU’s decision and aims to make this treatment available in the EU as soon as possible. According to the company update, Alzheimer’s disease currently impacts 6.9 million people in Europe, with the figure expected to almost double by 2050 due to an ageing population.
More About Eisai’s Alzheimer’s Drug
Lecanemab, marketed as Leqembi, is a monoclonal antibody medication used to treat Alzheimer’s disease. It is an irreversible brain disorder that gradually impairs memory and cognitive abilities.
Eisai has been working with the U.S.-based biotechnology company Biogen (BIIB) to co-commercialize and co-promote the product. Eisai leads the global development and regulatory submissions for lecanemab and retains the final decision-making authority. Eisai and Biogen have partnered on Alzheimer’s treatments since 2014. Biogen shares fell by 7.15% on Friday.
Lecanemab is already approved in the U.S., Japan, China, South Korea, Hong Kong, and Israel. It is currently being marketed in the U.S., Japan, and China.
Here’s What Jefferies Analyst Said
Analyst Stephen Barker from Jefferies stated the decision was a “very big negative surprise” and could also damage Leqembi’s reputation and sales in the U.S. and Japan. He further added that removing Leqembi sales in Europe from estimates could lead to a roughly 20% reduction in overall sales projections.
Barker has a Hold rating on Eisai stock and predicts an upside of 17.35% in the share price.
What Is the Target Price for Eisai Stock?
According to TipRanks, 4523 stock has received a Strong Buy rating based on three Buys and one Hold recommendation. The Eisai share price target is ¥9,442.41, which is 42.46% higher than the current price level.
