Eli Lilly Stock Gains After FDA Advisors Recommend Alzheimer’s Drug Donanemab

Eli Lilly (LLY) shares gained more than 2% in extended trading on Monday after a panel of independent advisors to the Food and Drug Administration (FDA) unanimously recommended the pharmaceutical giant’s Alzheimer’s drug donanemab, increasing the likelihood of its approval in the U.S. later this year.

While several of the advisors raised concerns about donanemab’s effectiveness in Black and Hispanic patients, among other groups, in the first vote, the committee unanimously said the benefits of the drug outweigh its risks in the second vote.

If approved, the drug would join Leqembi, a similar Alzhiemer’s drug manufactured by Biogen (BIIB) and its Japanese partner Eisai (ESAIY), to expand treatment options for the 6 million Americans who live with the memory-destroying disease. Both donanemab and Leqembi work by removing toxic beta amyloid plaques from the brains of people with early Alzheimer’s, helping to slow its progression, though neither treatment provides a cure.

“We really are pleased that the advisory committee recognized donanemab’s strong positive benefit risk,” Dawn Brooks, Lilly’s development leader for donanemab, said in an interview after the vote, Reuters reported. “Now with the panel’s unanimous support, the company looks forward to the FDA finishing its review”, she added.

Eli Lilly has faced several hurdles over the past eighteen months in its bid to bring donanemab to market, with the FDA rejecting the drug in January last year, before requiring a further review of the treatment’s safety and efficiency in March this year shortly before its expected approval ruling.

Watch This Key Level During Periods of Profit Taking

Eli Lilly shares have remained in a long-term uptrend since bottoming out below the 200-day moving average (MA) in early March last year. More recently, the price broke out from a three-month channel in mid-May and continues to make higher highs. Given the relative strength index (RSI) indicates overbought conditions with a reading above 70, investors may want to focus on retracement support levels.

During periods of profit-taking, it’s worth monitoring the $795 level, an area on the chart where the price would likely find support from the channel’s top trendline, which also sits in close proximity to the rising 50-day MA.

Eli Lilly shares gained 2.1% to $883.45 in after-hours trading.

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