Updates shares, adds company comments in paragraphs 4 and 5, analyst comments in paragraphs 9 and 11

May 14 (Reuters) - Biogen BIIB.O will advance its experimental Alzheimer's drug to late-stage development after a mid-stage study showed it slowed mental decline and reduced a key brain protein linked to the disease, although it failed to meet the trial's main goal.

Shares of the drugmaker were up about 6% in premarket trading after the announcement on Thursday.

The drug, diranersen, works by blocking the production of tau, a protein that builds up in the brains of Alzheimer's patients and disrupts communication between brain cells while contributing to cognitive decline.

"We believe we have seen an unprecedented and compelling confluence of efficacy and biomarkers results from a tau-directed agent in a randomized early Alzheimer’s disease study," said Priya Singhal, executive vice president and head of development at Biogen.

The data gives the company confidence to advance to larger, late-stage trials needed for regulatory approval, Singhal added.

The study examined 416 participants with mild cognitive impairment, who had previously not received anti-amyloid therapy.

Patients who received the drug showed meaningful reductions in tau levels in the brain across all three doses tested. They also showed signs of slower cognitive decline, with the strongest effect seen at the lowest dose, Biogen said.

The drugmaker did not provide any details on the magnitude of the effect.

However, the trial missed its main goal of showing a dose-response effect on a standard scale used to track dementia severity at 76 weeks, the company said.

"We are encouraged by the possibility of a cognitive benefit from tau targeting treatment, but a lack of dose response creates uncertainty on how consistent this benefit is in Alzheimer's patients," said BMO Capital Markets analyst Evan Seigerman.

Biogen said it would present full data from the study at a medical conference later this year.

"Though data are mixed, the lack of dose response does not invalidate the program," said Citi analyst Geoffrey Meacham.