March 28 (Reuters) - The European Union's drugs

regulator on Friday rejected Eli Lilly's ( LLY ) Alzheimer's

drug, saying the risk of serious brain swelling did not outweigh

the treatment's small impact on slowing cognitive decline.

The rejection of the drug, Kisunla, means Eisai ( ESALF )

and Biogen's Leqembi will likely pull ahead in the race

to become the EU's first approved Alzheimer's treatment, if the

European Commission accepts the agency's recommendation on the

rival drug.

The EU regulator's Committee for Medicinal Products for

Human Use (CHMP) in February

reiterated

its positive recommendation for Leqembi after concluding a

safety review.

Lilly said it would seek re-examination of the CHMP's

opinion.

"We hope that through the re-examination process, we

will be able to continue our discussions with the agency to

bring donanemab (Kisunla) to the millions of people across

Europe suffering from this relentless, fatal disease," said Ilya

Yuffa, executive vice president at Lilly.

(Reporting by Mariam Sunny and Padmanabhan Ananthan in

Bengaluru; Maggie Fick in London; Editing by Shreya Biswas and

Sriraj Kalluvila)