July 2 (Reuters) - The U.S. Food and Drug Administration

on Tuesday approved Eli Lilly's ( LLY ) treatment for early

Alzheimer's, making it the second therapy for slowing

progression of the brain-wasting disease that will be available

to U.S. patients.

The approval for donanemab, to be sold under the brand name

Kisunla, followed the recommendations of the agency's outside

experts, who unanimously backed its use in patients with early

Alzheimer's disease, saying the benefits of the drug outweighed

its risks.

"This is real progress," said Joanne Pike of the Alzheimer's

Association. "Having multiple treatment options is the kind of

advancement we've all been waiting for - all of us who have been

touched, even blindsided, by this difficult and devastating

disease."

Like Eisai ( ESALF ) and Biogen's rival drug

Leqembi, which was approved a year ago, donanemab is designed to

clear an Alzheimer's-related protein called beta amyloid from

the brain.

A key differentiating factor for donanemab is the drug's

finite dosing, which allows patients to stop taking the

treatment once brain scans no longer show amyloid plaques.

Lilly priced its drug at $695.65 per vial, or about $32,000

for 12-months of treatment consisting of 13 infusions. That's

slightly higher than Eisai's ( ESALF ) Leqembi, which costs $26,500 a

year.

BMO analyst Evan Seigerman said the price reflects the fact

that patients can stop treatment versus chronic treatment with

Leqembi.

"The details of how it will play out in clinical practice

are still unclear, but I think it will save a lot of money and

patients will like that a lot better," said Dr. Erik Musiek, a

Washington University neurologist at Barnes-Jewish Hospital.

"I think that, coupled with the monthly dosing, will make

this an attractive option," he added.

In Lilly's large, late-stage trial, donanemab slowed the

progression of memory and thinking problems by 29% compared with

a placebo. It also caused brain swelling in nearly a quarter of

patients and brain bleeding in nearly a third, but most cases

were mild.

As it did for Leqembi, the FDA placed its strongest "boxed"

safety warning on donanemab's prescribing label, flagging the

risk of potentially dangerous brain swelling and bleeding.

One key difference is that donanemab will require five MRI

scans to check for side effects, while Leqembi requires four,

which could be an advantage for the Eisai ( ESALF ) drug in centers where

such scans are scarce, RBC Capital analyst Brian Abrahams said

in a research note.

Eisai ( ESALF ) and Biogen have started submitting data to the FDA to

support approval of a monthly maintenance dose to be given as an

IV infusion, as well as a weekly injected version of Leqembi

that patients could receive at home.

Lilly's drug is expected to be used mostly by patients

enrolled in the U.S. government's Medicare health plan for

people age 65 and older. Medicare last year began covering

Alzheimer's drugs that receive standard FDA approval.

Morningstar analyst Damien Conover said he expects Lilly's

drug to generate peak annual sales of over $5 billion, and "a

fairly evenly split market between donanemab and Biogen's

Leqembi."

More than 6 million Americans have Alzheimer's disease,

according to the Alzheimer's Association.