🎢 Lecanemab and the Rollercoaster of Biotech Stocks

Introduction — Why Do Biotech Stocks Swing So Wildly?

Biotech stocks show more dramatic volatility than any other sector. A stock may be calm in the morning, only to skyrocket to the sky or crash to the floor by the evening on a single headline.

When a car company announces a new model, the stock doesn’t jump 30%. When a tech company launches a new gadget, it doesn’t fall 40%. But for a biotech company, one clinical data release or one regulatory decision can move the stock just like that.

Because the value of a biotech company usually depends on a drug that hasn’t been sold yet. Revenue and profit are not here yet; the valuation rests entirely on clinical trials and the possibility of approval — all expectations and assumptions.

That’s why signals like “the drug works/doesn’t work,” “approval is likely/unlikely,” or “insurance will/won’t cover it” are directly reflected in the stock price.

In addition, there’s a crucial question: can patients realistically use the drug? If the price is too high, hospital visits are too frequent, or side effect management is too complex, investors immediately lower their revenue expectations.

• Quality of clinical data – How clear and convincing are the results?
• Regulatory decisions – What ruling will the FDA or other regulators make?
• Insurance coverage – Will CMS and insurers be willing to pay for it?
• Real-world usability – Do price, dosing, and safety fit patient reality?

When these four collide, stock prices swing like a rollercoaster. 🎢

A perfect case study that makes this abstract explanation visible is the story of Eisai and Biogen’s Alzheimer’s drug, Lecanemab (Leqembi).

From 2018 to 2024, its journey made scientists, patients, and investors cheer and despair in turn. Some days, a “glimmer of hope” sent the stock soaring. The next quarter, “uncertain efficacy” sent it tumbling. Approvals brought euphoria, only for insurance hurdles to bring disappointment again.

Let’s now follow this 7-year drama and see, vividly, why biotech stocks rise and fall.

Act 1 — 2018, A Faint Light: Study 201

In the summer of 2018, when most had given up on Alzheimer’s drug development, unexpected news arrived. Eisai and Biogen reported results from their candidate Lecanemab (BAN2401) in a Phase 2 trial.

This study involved 854 patients, testing different doses and frequencies. In simple terms: “Should we give less? More often? Or a lot at once?” — they tested all at the same time.

The results were puzzling. At 12 months, interim analysis showed no effect. Many thought: “Another failure?” But at 18 months, the final analysis revealed a signal: Amyloid plaques in the brain decreased, and patients’ memory and cognitive decline slowed.

In the highest dose group (10 mg/kg every other week), Eisai reported: ADCOMS improved 27–30%, ADAS-Cog14 47–56%, CDR-SB 26–33%. Not everything was perfect. Some measures were still ambiguous, and side effects (ARIA-E, brain swelling) appeared. Still, researchers concluded: “We missed the 12-month mark, but at 18 months the effect was clearly there.” (Alzheimer’s Research & Therapy, 2021)

Immediate Market Reaction

The market reacted instantly: Eisai’s shares up as much as 14.6%… Biogen up 7% after-hours (Reuters, 2018-07-06).

Just three months later, however, headlines read: “data fails to convince skeptics” (2018-10-25), and stocks dropped again.

Lesson here: Biotech stocks swing when data is ambiguous. When results are mixed — 12 months missed vs 18 months positive — markets immediately price in uncertainty.

Act 2 — 2019~2021, The Pendulum of Hope and Doubt

The Phase 2b of Lecanemab clearly showed “light.” But because the 12-month data was negative, skepticism was strong.

Eisai kept releasing more data in 2020–2021 at conferences and in journals: “At 18 months the effect is consistent, and follow-up studies show signals are sustained.” (BioMed Central, Alzheimer’s Research & Therapy)

Yet markets were still unconvinced. “Does it really work? Or is this just a statistical illusion?” Hope and doubt swung like a pendulum.

Then Came 2021: Aducanumab Enters the Stage

Biogen’s other Alzheimer’s drug, Aducanumab (Aduhelm), received FDA accelerated approval. The data was messy. Some trials showed no benefit, others showed slight positive signals. Academia was shocked: “How can this be approved?”

But the FDA said: “The reduction in amyloid plaques is reasonably likely to predict clinical benefit.” (FDA, 2021 press release). On approval day, Biogen’s stock jumped 38% in a single day.

The Spillover Benefit to Lecanemab

Aducanumab failed commercially. Insurers refused, doctors avoided prescribing, sales were minimal. But for Lecanemab, this was a paradoxical boost.

• Same company, same target (amyloid): If Aducanumab with messy data can be approved, then Lecanemab with cleaner data has much higher chances.
• Data quality comparison: Lecanemab already showed more consistent 18-month data and fewer side effects.
• Regulatory signal: FDA set a precedent: amyloid reduction alone could justify approval. For Lecanemab, this meant the regulatory bar was lower.

Lesson here: Competitor approvals/failures reset the valuation and expectations for the entire space.

Act 3 — 2022, The Long-Awaited Climax

In September 2022, the world of Alzheimer’s research and investors held its breath. Eisai and Biogen announced results from the large Phase 3 “Clarity AD” trial.

Trial Size and Design

This trial enrolled 1,795 early Alzheimer’s patients worldwide. Over 18 months, half received Lecanemab, the rest placebo. The key measure was CDR-SB, which tracks daily living, memory, and problem-solving ability.

The Famous ‘27%’

Results were clear: Patients on Lecanemab showed 27% slower cognitive decline over 18 months. Not just brain plaques reduced, but real-world functional improvement followed.

Side effect ARIA-E appeared in 12–13% but was mostly manageable, with few severe cases. “Lecanemab… resulted in moderately less decline on cognition and function at 18 months.” (NEJM, 2022)

Market Explosion

The market erupted: Biogen stock +35% in a day, Eisai in Tokyo +17%. “Biogen’s stock surged 35.4%… Eisai hit the daily limit in Tokyo, climbing 17%.” (Reuters, 2022-09-28). Media declared: “The Alzheimer’s era begins.”

Why It Mattered So Much

• First clear clinical improvement: Past drugs reduced amyloid but never improved function. Lecanemab was the first to connect brain change → patient improvement.
• Regulatory confidence: With Aducanumab already approved, Lecanemab’s much cleaner data meant approval is only a matter of time.
• Investor sentiment shift: Alzheimer’s R&D, long seen as a money pit, now looked like a real opportunity.

In One Sentence

In 2018’s Phase 2b it was “light or illusion?” In 2022’s Phase 3, the verdict was: The light was real. This breakthrough led to accelerated approval in 2023 and full approval in 2024, making Lecanemab the first clear winner in Alzheimer’s drug history.

Act 4 — 2023~2024: Approval, Insurance, and Reality

January 2023: The First Door Opens

On January 6, 2023, the FDA granted accelerated approval to Lecanemab. “Accelerated Approval is based on reduction in amyloid plaques.” (FDA press release). Biogen and Eisai stocks jumped 5–10% on the news.

But the Harsh Wall of Reality

The problem: insurance coverage. Most U.S. Alzheimer’s patients rely on Medicare (CMS). CMS announced: Coverage only for trial participants.

That meant ordinary patients would pay the full $26,500/year. Add to that biweekly IV infusions and MRI scans to monitor ARIA side effects. In practice, the drug was inaccessible.

July 2023: The Second Door

In July 2023, the FDA granted full approval, and CMS reversed course: “will cover… broadly” (CMS, July 6, 2023).

At that moment, Lecanemab transitioned from experimental drug to real patient treatment. Eisai and Biogen stocks rebounded, and headlines declared: “The Alzheimer’s era has opened.”

Conclusion — The Real Reasons Biotech Stocks Rise and Fall

• Clinical data: In 2018 Phase 2b, “missed at 12 months but worked at 18 months” made stocks swing. The market always instantly prices the clarity and quality of data.
• Regulatory events: In 2021, Aducanumab’s controversial approval sent Biogen up 38% in one day. For Lecanemab, it meant a premium: cleaner data → higher approval chance.
• Insurance & coverage: Accelerated approval in January 2023 saw limited reaction because CMS restricted coverage. In July, full approval + nationwide CMS coverage drove a second rally.
• Real-world use: $26,500 annual price, biweekly IV infusions, MRI monitoring. These hurdles slow uptake and force investors to recalibrate expectations.

Thus, Lecanemab’s case teaches us: Biotech stocks don’t move only on whether a drug works or not. They move when clinical data is clear, regulators set the tone, insurers decide to pay, and patients can actually use it.

Lecanemab’s dramatic 7-year saga is a must-remember lesson for any investor: “The price of biotech stocks is set by science, regulation, insurance, and reality — four gears that must all turn together.”