The Food and Drug Administration (FDA) announced accelerated approval for lecanemab which showed evidence that it was able to slow cognitive decline in people with mild impairment from Alzheimer's disease. However, the treatment does bring with it an increased risk of brain swelling and bleeding.

The drug was developed in partnership with Biogen (IBB  ) and a Japanese company, Eisai. It's the second treatment to receive FDA approval on an accelerated basis in less than 2 years. The treatment is expected to be priced at $26,500 annually and will be sold under the name Leqembi.

Accelerated approvals are rare and only granted if it's superior to currently available treatments. Currently, more than 6.5 million people in the US are afflicted with the disease, and it's irreversible in slowly eroding patients' memory, cognitive skills, and ability to perform simple tasks.

The decision was somewhat unexpected given the blowback from Biogen and Eisai's first treatment, Aduhelm which many believed didn't show any 'clear benefits' that would justify accelerated approval. According to a recent report from Congress, the approval was 'rife with irregularities,' and steps should be taken to avoid another occurrence.

This treatment is similar in design as it's a monoclonal antibody that reduces amyloid which is a protein plaque that builds up on the brain membranes of Alzheimer's patients. The major argument of detractors is that amyloid is a marker of Alzheimer's rather than a contributor. It's clear that lecanaemab can help reduce the buildup of plaque but less firm on whether this can have material effects on reducing Alzheimer's.

Clinical trials did show that patients who were administered lecanemab had 27% less cognitive decline over 18 months than the control group. But, the trial also showed some risks as 13% of the group who were administered the treatment, had brain swelling compared to 2% of the control group with brain swelling. 17% of those administered the treatment had brain bleeding, while 9% in the control group had similar symptoms.

Biogen shares were up slightly on the news, although shares have been trending higher with a 21% gain over the last year. The stock remains quite cheap relative to the rest of the market with a P/E of 14 which is cheaper than the S&P 500 (SPY  ). Interestingly, Biogen shares have been range-bound since 2014, although earnings are materially higher as the company has evolved from a growth stock into a value play.