The world has waited decades to declare a winner in the uphill battle against Alzheimer's disease, and victory could come within a few months via a drug made by Biogen (BIIB) — or not.
The giant biotech company could bask in glory, but it just as easily could have laid an egg, sending not only Biogen stock reeling but also several other biotech stocks.
Biogen's FDA approval bid holds high stakes for drugmakers trying to get a handle on one of the most elusive disorders known to modern medicine. Their luck could well be running out as the drug's rejection could cast a cloud over other Alzheimer's treatments in development. Some even argue Biogen is headed down the wrong path if it hopes to finally beat Alzheimer's.
But Remi Barbier, chief executive of another biotech company trying to solve the Alzheimer's puzzle, Cassava Sciences (SAVA), says a win for Biogen stock could propel others working on Alzheimer's drugs. That list includes Cassava stock, which surged and toppled in February on its own Alzheimer's treatment study.
"At this point, investors need a win," Barbier told Investor's Business Daily. "Everyone needs to show investors that, yes, it's possible to get approval in Alzheimer's disease. And so, a Biogen approval is a win for the entire industry."
Number Of Alzheimer's Patients Expected To Double
An estimated 6.2 million Americans are living with Alzheimer's today. That number is expected to hit 13 million by 2050, according to the Alzheimer's Association. The winning Alzheimer's treatment could generate billions in sales — and open the door for other biotech stocks to storm the disease.
But getting the win for which the biotech industry yearns promises to be difficult. The data supporting Biogen's drug, aducanumab, are far from "clean," analysts say. And although the FDA seems to support its approval, experts aren't convinced. In fact, an advisory committee voted against recommending the drug's approval last year.
Here's the rub about aducanumab: The drug actually failed in two final-phase studies back in March 2019. Biogen stock lost a third of its value that day.
Then seven months later, Biogen flipped course and said the experimental Alzheimer's treatment succeeded in one Phase 3 test. That sent Biogen stock up nearly 31%.
Advisory Panel Votes Against Drug
That latter view is based, in part, on an ad hoc analysis the FDA helped create. FDA briefing documents suggested the agency is on board with an aducanumab approval. Yet 10 members of an advisory committee voted against recommending aducanumab's approval. One panelist was uncertain. None voted yes. The FDA isn't bound by the panelists' vote, but it often follows their recommendation.
Treating Alzheimer's disease is tricky because no one has proved what causes it. Aducanumab relies on the theory that Alzheimer's is triggered by the buildup of abnormal plaques in the brain known as beta amyloid.
The drug technically does its job and removes those plaques. But critics say that hasn't translated into a strong enough cognitive improvement.
Other approaches could be even more promising. On Friday, Annovis Bio (ANVS) shares rocketed after the company said its midstage Alzheimer's treatment improved cognition on a key measure over the course of just 25 days. It outperformed both Biogen and Cassava. Annovis is targeting neurotoxic proteins which, it says, impair the communication between nerve cells.
Biogen Stock And Anti-Amyloid Approach
"The anti-amyloid approach has been the No. 1 approach for the past 25-30 years," Cassava's Barbier said. "It has failed repeatedly. Normally, when an approach fails, sometimes you try again. Certainly, three strikes and you're out. It's been 20 strikes and they're still batting."
Biogen stock isn't the only one tied to the amyloid theory. Eli Lilly (LLY) stock surged nearly 12% on Jan. 11 after the company's amyloid-targeting Alzheimer's drug, donanemab, slowed cognitive decline by 32% vs. a placebo.
But Eli Lilly stock fell more than 9% on March 13 when the results were murkier for a specific measure of cognition.
UBS analyst Navin Jacob says Lilly didn't hit a homer. But the data "took a very negative outcome off the table." In medicine, there's plenty of room for improvement, he said in an interview. So, amyloid-targeting drugs could offer a first-generation approach to treating Alzheimer's disease.
"Targeting amyloid beta is doing something," he said. "We can argue about the magnitude of that."
Biogen Stock And Other Biotech Stocks
Approving aducanumab has huge implications for Biogen stock and other biotech stocks working on Alzheimer's disease.
First, Biogen stock. Generics are eating into sales of its biggest moneymaker, the multiple sclerosis treatment Tecfidera. In the first quarter, Tecfidera sales plunged 56%. Further, Biogen and partner Ionis Pharmaceuticals (IONS) face rivals to their spinal muscular atrophy drug Spinraza. Sales fell about 8%.
So, Biogen stock has a lot riding on aducanumab. Approval of the drug could also be meaningful for another Biogen late-stage Alzheimer's drug, BAN2401, developed in partnership with Japan's Eisai.
But it also is putting other irons in the fire. Biogen announced a collaboration with Sage Therapeutics (SAGE) in November to jointly develop two neurological disease treatments — one for depression and for other psychological disorders, the other for essential tremors and other neurological disorders.
"They've (Biogen) been evolving over the past year in anticipation of that coin flip we have coming," LifeSci Capital Director of Research David Sherman said in an interview.
Sherman isn't a believer in the amyloid theory of Alzheimer's disease. In fact, he vehemently disagrees with it. But an aducanumab approval would certainly put Eli Lilly at ease with donanemab, he says. It could also prop up other biotech stocks working on anti-amyloid approaches.
"You're going to continue to see more investment into other amyloid-targeting approaches," he said. "That, I think, is the biggest downside here to approval — the amount of initial excitement and continued enthusiasm there will be for the amyloid hypothesis."
Biogen Stock Ahead Of The Pack
Biogen didn't return an IBD request for comment.
Shares of Biogen stock have outperformed the biotech stock universe this year. On a year-to-date basis, shares of Biogen had climbed 17% as of Thursday's close, vs. a nearly 12% dive for biotech stocks, collectively.
Trouble is, the industry group of nearly 700 publicly traded biotech companies recently ranked a weak No. 140 out of 197 groups Investor's Business Daily tracks. That puts the group itself in the bottom one-third of all groups.
The leading biotech stock is BioNTech (BNTX), a Covid vaccine maker whose shares have a Composite Rating of 96. This puts BioNTech stock in the top 4% of all stocks in terms of fundamental and technical growth measures. Biogen stock, on the other hand, has a Composite Rating of 44. So, shares rank in the bottom half of all stocks. BioNTech also has a bullish Relative Strength Rating of 98, compared with Biogen stock's RS Rating of 33.
Alzheimer's Drugs: Waiting for The Right Timing
Credit Suisse analyst Vamil Divan says it's possible amyloid approaches simply haven't found the right timing or right type of patient. Further, pushing a drug beyond the blood-brain barrier is notoriously difficult.
"I think that's what we're trying to work through in the space — how, when and what's the right drug?" he said in an interview.
Aducanumab has proved to be a volatile point for Biogen stock. But Divan doesn't believe the FDA will take the same approach to every amyloid-targeting drug that crosses its desk. He expects regulators to assess each experimental treatment based on its own merits and risks.
But LifeSci's Sherman has a twofold concern. If the FDA approves aducanumab, he expects more biotech stocks will flock to the amyloid approach that he opposes. Further, an approved Alzheimer's drug on the market could stymie enrollment in studies of alternative approaches to the disease.
Taking On Biogen Stock
Anavex Life Sciences (AVXL) Chief Executive Christopher Missling says the unmet need in Alzheimer's disease won't disappear even if aducanumab gains FDA approval. In fact, approval could push biotech stocks to focus on alternatives to the amyloid approach that could offer a bigger benefit — namely, second-generation drugs.
"There will be no change in the unmet need," he said in an interview. "I believe the demand will be even (greater) and will increase for finding appropriate treatments because the cost (of Alzheimer's disease) is so high and will lead to a potential bankruptcy of the Medicare system."
This is where other theories enter the picture to take on aducanumab and Biogen stock.
Amyloid buildup likely has a part to play in the Alzheimer's tale, but it's "not the entire story," Anavex CEO Missling said. Today, biotech companies know Alzheimer's patients share many characteristics.
"In addition to a-beta, there's also (a protein called) tau, but there's also inflammation, there's also mitochondrial dysfunction, there's also calcium imbalance," he said. "So, which one is it now? It's a moving target."
Instead of aiming for amyloid, Anavex is shooting above it. The company is testing a drug that recruits the sigma-1 receptor to help. Sigma-1 is a mysterious protein. Experts say sigma-1 is "pro-survival," but they aren't quite sure yet how it works.
Alzheimer's Treatments That Work Like A Fire Truck
Missling likens sigma-1 to the body's fire truck — it shows up in times of stress or dire need. Sometimes, the brain might need more receptors to help recruit more sigma-1 protein to assist.
"That's where the fire truck needs to be called: To push back on the imbalances," he said. "There's a lack of receptors to help the protein do its job. So, we add receptors from the outside."
Similarly, Cassava isn't ignoring amyloid entirely. The company believes that by refolding an abnormal protein it can neutralize the damaging effects of amyloid. The biotech stock saw a triple-digit gain over the course of several days in February on its Alzheimer's data. Later, Cassava stock tumbled.
So, Biogen stock isn't the only biotech stock that's volatile on Alzheimer's news.
Cassava's drug has shown promise. Patients taking it showed improved cognition over six months. The next update comes at nine months, Maxim Group analyst Jason McCarthy said in a note to clients. CEO Barbier says the 12-month update from an open-label study will also be important for the biotech stock.
"If you can improve cognition, you can turn back the clock," he said. "You can give them another few years of life."
An Alzheimer's Drug That Bypasses Amyloid Entirely
Other biotech stocks bypass amyloid entirely — an approach that has gained steam over the last few years.
Athira Pharma (ATHA) CEO Leen Kawas argues experts still don't agree on what causes Alzheimer's disease. So why not find a target upstream of amyloid?
"We don't fully understand the pathologies that lead to degeneration, so we need approaches that are agnostic of the underlying pathology because we are tackling the outcome," she told IBD. For Alzheimer's disease, the outcome is the breakdown in cognition.
Biotech stock Athira went public last year. It's working on drugs that aim to help Alzheimer's patients regain synaptic connections in the brain. Athira's lead approach is being tested first to improve the symptoms of Alzheimer's disease.
Treating the symptoms is different from modifying the course of Alzheimer's. Disease-modifying treatments must be studied over a longer period of time, Kawas says. Athira is working on both treating and modifying, and hopes to have an answer on the latter question by the end of 2022.
Aiming At Bacterial Infection With Alzheimer's Treatments
Meanwhile, Cortexyme (CRTX) is coming out of the shadows with a new approach to Alzheimer's. The biotech stock went public in 2019. Its founders believe a bacteria called p gingivalis — the cause of periodontal disease — is responsible for Alzheimer's disease when it enters and flourishes within the brain.
This is where LifeSci Capital's Sherman is betting. He says beta amyloid isn't a result of Alzheimer's disease — it's actually an antimicrobial defense mechanism that predates the immune system. It's trapping pathogens in a "net" and tagging them as something for the immune system to clear, he says.
"It's a very highly conserved protein," he said. "We're talking 400 million years of evolution and it's found in most vertebrates. This isn't something that's kind of been carried along through the evolutionary lineage for no reason."
Cortexyme CEO Casey Lynch says amyloid is a downstream effect of the p gingivalis bacteria infecting the brain. She's especially bullish on the company's theory of what causes Alzheimer's disease. The company expects to have pivotal data in the fourth quarter.
As for Biogen stock and aducanumab's review this summer? Lynch doesn't expect it to impact Cortexyme.
"We have such a different hypothesis and really well-designed pivotal study," she told IBD. "I think our situation is quite independent of what happens with Biogen."
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