6 Small Drug Stocks In Focus Ahead Of World Alzheimer's Day

Every year World Alzheimer’s Day is observed on Sep 21, which is part of World Alzheimer's Month. The theme this year is to raise awareness to counter the common stigma surrounding Alzheimer’s related dementia. The World Alzheimer's Month campaign was launched in 2012.

A type of dementia, Alzheimer’s disease (AD) is a progressive medical condition. The majority of AD patients are aged above 65 years. However, per estimates, approximately 200,000 people below the senior citizen age bracket are suffering from the disease in the United States alone. Most people often think that this disease is normal during one’s silver years.

Drugs/Therapies Currently Approved

While there is no cure for the disease yet, there are a few drugs approved by the FDA for Alzheimer’s that help control the symptoms. A class of drugs called cholinesterase inhibitors is administered to patients in the early-to-moderate stages of Alzheimer’s. Among these, Exelon (NYSE:EXC) patch is a prescription medicine used to treat mild, moderate, and severe memory problems associated with AD. Allergan’s Namenda is an N-methyl-D-aspartate (NMDA) receptor antagonist indicated for the treatment of moderate-to-severe dementia of the Alzheimer’s type. Generic versions of Namenda have also been launched.

Failures Outweigh Successes

Alzheimer’s has always been a highly challenging area with not much progress being made in spite of significant investments (both funds and resources). Several companies have failed to develop safe and effective treatment options for this deadly brain disease. This may be somewhat because the underlying causes of severe neurological ailments like Alzheimer’s may not be as clear as diseases like cancer. Also, Alzheimer’s progress may go unnoticed for years. By the time, the symptoms of the ailment become evident, significant functions may be already lost, which makes developing drugs to treat this disease difficult.

According to the Alzheimer's Association, in the 10 years from 2002-2012, 244 drugs were tested for Alzheimer’s in studies registered with clinicaltrials.gov, out of which only one succeeded and went on to gain FDA approval.

Big shots like Merck, Lilly, Biogen (NASDAQ:BIIB), Amgen (NASDAQ:AMGN), Novartis and Pfizer (NYSE:PFE) have terminated development of candidates for AD due to failure of studies.

Among more recent failures, in July, Amgen/Novartis discontinued two pivotal late-stage studies on their BACE1 inhibitor CNP520 to prevent or delay the symptoms of AD in a high-risk population as some patients in the studies experienced worsening of cognitive function. Last week, Biogen/Eisai discontinued two late-stage studies on elenbecestat, following a safety review conducted by the Data Safety Monitoring Board. The board’s recommendation to discontinue the studies was due to unfavorable risk-benefit ratio. In March, Biogen/Eisai discontinued two phase III studies on aducanumab in early AD as a futility analysis showed that the studies were unlikely to meet their primary endpoints. In January, Roche (RHHBY) discontinued two late-stage studies evaluating crenezumab as it was unlikely to meet primary endpoints of the studies. Roche is developing crenezumab in partnership with AC Immune (NASDAQ:ACIU) .

Interest Still Alive in the Area

Despite the setbacks, several companies continue to invest heavily in developing AD treatments, given the high commercial potential of this market (estimated value of the U.S. market for the disease is around $30 billion) and also due to an increase in the understanding of this disease. Success in this area will lead to huge returns, considering 5.8 million Americans are living with Alzheimer’s disease with the numbers expected to more than double by 2050 (Data: Alzheimer's Association). It is considered to be one of the biggest burdens of society and is the sixth leading cause of death across all ages in the United States. The market has immense commercial potential and companies coming out with new treatments could rake in billions of dollars in sales.

In 2018, the FDA proposed new guidelines, which are aimed at lowering the clinical study goals of Alzheimer’s disease drugs, aimed to treat earlier-stage patients who have not yet displayed functional disability or clinical abnormality. This strategy is part of FDA’s ongoing efforts to expand access to safe and effective treatment options for many serious conditions. These efforts by the FDA may also reinvigorate research efforts related to Alzheimer’s drugs after repeated failures.

Stocks in Focus

Let us take a look at six small-cap companies with promising candidates in their pipeline for AD.

AC Immune

AC Immune has collaborated with Lilly is to research and develop tau aggregation inhibitor small molecules for the potential treatment of AD and other neurodegenerative diseases. In July, AC Immune dosed the first patient in a phase I study of Zacks Investment Research

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Written By: Zacks Investment Research