Shares of the Cambridge, Mass., company were soaring 57% to $450 at last check after trading was halted earlier in the session. The drugmaker's shares have risen nearly 17% year to date.
The approval is for aducanumab, which will be marketed under the name "Aduhelm." The decision makes the drug the first new treatment for Alzheimer’s disease in nearly two decades.
Biogen partners on the drug with Japan's Eisai.
"This approval is significant in many ways. Aduhelm is the first novel therapy approved for Alzheimer's disease since 2003," the FDA said in a statement. "Perhaps more significantly, Aduhelm is the first treatment directed at the underlying pathophysiology of Alzheimer's disease, the presence of amyloid beta plaques in the brain."
The FDA said the clinical trials for Aduhelm "were the first to show that a reduction in these plaques - a hallmark finding in the brain of patients with Alzheimer's - is expected to lead to a reduction in the clinical decline of this devastating form of dementia."
The agency said it ultimately decided to use the Accelerated Approval pathway, which is "intended to provide earlier access to potentially valuable therapies for patients with serious diseases where there is an unmet need, and where there is an expectation of clinical benefit despite some residual uncertainty regarding that benefit."
"In determining that the application met the requirements for Accelerated Approval, the Agency concluded that the benefits of Aduhelm for patients with Alzheimer's disease outweighed the risks of the therapy," the FDA said.
In January, analysts reacted positively to the FDA’s decision to extend by three months the review period for aducanumab.
In November, scientific advisers to the FDA recommended rejection of the drug.
The FDA's Peripheral and Central Nervous System Drugs Advisory Committee voted 8 to 1 against recommending approval of Biogen's treatment aducanumab, while two members cast "undecided" votes.
The agency isn’t bound to follow its advisers’ advice, but it generally follows the recommendations of its underlying advisory panels.
Alzheimer’s represents the sixth most prevalent cause of death in the U.S. Biogen has estimated that around 1.5 million Americans would be eligible for treatment with aducanumab
Other companies have also been working on Alzheimer's treatments.
Annovis Bio (ANVS) - Get Report last month saw its shares take off after the clinical stage drug platform company reported progress in a study involving a candidate to treat Alzheimer's and Parkinson's disease.
Eli Lilly (LLY) - Get Report said in March that donanemab, an investigational antibody, showed a 32% reduction in a composite measure of cognition and daily function in trial patients suffering early symptomatic Alzheimer's disease following Phase 2 trials.
Alzheimer’s disease is the most common cause of dementia. There are more than 50 million people worldwide living with dementia, a figure expected to increase to 150 million by 2050.
The worldwide cost of dementia is $818 billion, according to Alzheimer's Disease International.