Biotech General Discussion

Summary

• Biotech companies continue to focus on Alzheimer’s disease with some promising early clinical data this year

• SAVA, AVXL, and ANVS are 3 stocks up over 100% this year

• SAVA, AVXL, and ANVS are Big-Mover Alzheimer’s stocks to watch because of key readouts in the next few months

Alzheimer's Stocks To Watch

Alzheimer’s disease (AD) is one of our biggest health challenges for society today and a huge focus for biotech companies. It is a progressive, multi-factorial disease and the most common cause of primary neurodegenerative dementias. AD incidence in the U.S. is approximately 5 million (See Alzheimer’s disease: pathogenesis, diagnostics, and therapeutics). There are no commercially available therapies to address the underlying biological cause of AD’s progressive cognitive decline. Thus, developing new drugs to treat AD is a huge unmet medical need.

Table 1 lists Alzheimer’s biotech companies and their clinical stage Alzheimer’s drug candidate(s), from our BPIQ database of virtually all publicly traded biotech companies with market caps under $5 billion. Our list is intended to focus on drugs from companies whose share price is most likely maximally impacted by clinical trial results and includes a small fraction of the total agents in clinical trials for AD, which was recently listed at 126 agents (Alzheimer's disease drug development pipeline: 2021). Fortunately, promising early results this year for some of these Alzheimer’s drug candidates have given renewed hope for meaningful breakthroughs in this horrible disease and have propelled the valuation and thus stock price, of the sponsor companies (Table 1).

It is noteworthy that TNXP, with a market cap of ~$400M has average volume that is almost 5x that of the next closest Alzheimer’s company in our database. This could be from it’s sudden popularity in message boards and communities like Reddit earlier in the year (See Tonix, Biolase Join Penny Stocks Surge After Reddit Touts article). TNXP has been cleared for clinical trials by the FDA, but a trial has not yet begun (BPIQ subscribers, See TNX-102 in Alzheimer’s IQ card). It is noteworthy that TNXP is testing many indications for TNX-102, several of which are in active clinical trials (See FIG. 1). TNX-102 is a multifunctional agent that antagonises a number of receptors, including the 5-HT2A, α1-adrenergic and histamine H1 receptors (BPIQ subscribers, See TNX-102 in Alzheimer’s IQ card).

Table 1. Alzheimer’s Drug Candidates for Biotech Companies*

*Biotech companies with valuations between $100M and $5B

FIG. 1 TNXP pipeline from BPIQ.com

ANVS and SAVA are both up over 1000% this year, on encouraging data that showed not only slowing the progression of symptoms, but some possible reversal (e.g. see our prior article https://bit.ly/3oEH5vD). It is noteworthy that positive (or likely negative) news can move many of the Alzheimer’s companies, not just the reporting company. For example, SAVA’s positive clinical trial update on February 2 of this year (See press release: Cassava Sciences’ Simufilam Improves Cognition and Behavior in Alzheimer’s Disease in Interim Analysis of Open-label Study) appeared to move many of the other Alzheimer’s companies by more than 10% (See Table 1 Stock moves 1/31-2/8/21).

Of course caution is warranted for these Alzheimer’s drug candidates because historically, Alzheimer’s has been a graveyard for mid to late-stage drug candidates (See Review). Alzheimer’s drugs have been in the spotlight recently because earlier this month Biogen gained approval for its drug Aduhelm (FDA grants accelerated approval for ADUHELM™ as the first and only Alzheimer’s disease treatment to address a defining pathology of the disease) for treating Alzheimer's disease (See Aduhelm label). However, this came with considerable controversy and actually against the recommendation of an FDA Advisory Committee, because of mixed late-stage clinical trial results for the drug (FDA’s Decision to Approve New Treatment for Alzheimer’s Disease). Released FDA records have confirmed that the agency relaxed their requirements as part of the accelerated approval rather than a full approval because of the mixed clinical trial data balanced against the desperate needs of Alzheimer’s patients (“FDA releases fresh details on internal debate over controversial Alzheimer’s drug“ Washington Post 6/22/21).

Current Alzheimer’s drug candidates of small/mid-cap biotech companies are quite diverse. They are directed against many different targets and include both biologics and small molecules (Table 2). The vast majority of the clinical assets are in Phase 2 or Phase 3, with ADMS as the only company we identified thus far in our database that derives revenue from a currently approved Alzheimer’s drug, Namzaric (See Namzaric.com). It is our understanding that ADMS gets licensing revenue from Allergan, who commercialized this drug It is also noteworthy that Namzaric’s label includes the specific clarifying statement: ”There is no evidence that NAMZARIC prevents or slows the underlying disease process in patients with Alzheimer's disease” (Namzaric label).

Table 2. Alzheimer’s Drug Candidate Details from pipeline search on bpiq.com

Table 3. Alzheimer’s Drug Candidate Details

As can be seen from Table 3, ANVS, SAVA, and ACIU have readouts coming in the next 6 weeks. Not shown in Table 2 is that AVXL is reporting more detailed results from its Phase 2B trial in Parkinson’s Disease with Anavex 2-73 this month, which is highly relevant for its Alzheimer’s trial. Based on our analysis of facts around the upcoming readout as well as based on stock options volatility data, AVXL, ANVS, and SAVA are among our current BPIQ biotech Big-Mover stocks to watch (See our June/July 2021 Big-Movers LIST and ARTICLE.

AVXL stock increased over 100% in early February when SAVA reported their open-label study data showing an improvement in cognition over of 1.6 points in ADAS-Cog11 and dementia-related behavior of 1.3 points in NPI score, over 6 months (See press release: Cassava Sciences’ Simufilam Improves Cognition and Behavior in Alzheimer’s Disease in Interim Analysis of Open-label Study). It is unclear to us whether AVXL’s increase on SAVA’s data was due to the market seeing a correlation in mechanisms of action of AVXL’s and SAVA’s Alzheimer’s candidates, Anavex 2-73 and Simufalim, respectively, or the market having more confidence in Anavex 2-73 prior positive results in Alzheimer’s and ongoing trial after seeing Simufalim’s data, further suggesting that slowing or even reversing dementia associated with Alzheimer’s is possible. Anavex 2-73’s functions as an activator of the Sigma-1 receptor, whereas Simufilam binds to and restores the normal shape and function of altered filamin A in the brain (See our Simufilam Alzheimer’s IQ Card). AVXL is up over 75% this month after announcing that enrollment exceeded its target for it’s Alzheimer’s trial (See press release), after a positive peer-reviewed paper that suggested that its drug candidate, Anavex 2-73, could be effective in treating Alzheimer’s based on its mechanism of action targeting the Sigma-1 receptor (Prasanth MI et al., The emerging role of the sigma-1 receptor in autophagy: Hand-in-hand targets for the treatment of Alzheimer’s. Expert Opin Ther Targets. 2021 Jun 10; See related Anavex press release), and after publishing more data on its trial for Anavex 2-73 in Rett’s disease. Anavex 2-73 (Blarcamesine) is currently in a Phase 2b/3 trial for Alzheimer’s disease that is scheduled to read out in about 1 year (Table 3).

ANVS is up over 1000% since their report earlier this year of surprisingly good efficacy data in a Phase 2 study of their drug candidate, ANVS401. In the first 14 Alzheimer’s patients analyzed, after 25 days of treatment, patients experienced a statistically significant 4.4 point improvement in the ADAS-Cog11 score, a commonly used cognitive score of Alzeimer's disease. It is interesting to note that SAVA’s CEO indicated that leading scientists do NOT consider ADAS-COG a valid cognition test at 1 month. Rather, he indicated that at least 3 months is required (Listen to Casava presentation at the Raymond James 2021 Human Health Innovation Conference (June 2021)). This may have been retaliation for ANVS’s statements where it highlighted that Casava reported only a 1.6 point improvement in ADAS-COG over six months, whereas ANVS showed a 4.4 point improvement and statistical significance over placebo, over 25 days (See “ANNOVIS BIO ANNOUNCES POSITIVE PHASE 2 DATA – ANVS401 IMPROVES COGNITION IN ALZHEIMER’S DISEASE - PATIENTS’ COGNITION IMPROVED 3.3 POINTS ON ADAS-COG11” ANVS press release 5/21/21. For investors, all this competitive battling helps us to see the possible weakness in the data for these companies, in addition to its strengths as reported by the sponsor company.

Even if the ADAS-COG data over 1 month is not valid, ANVS reported impressive data a few weeks later showing an increase in fine-motor dexterity, speed, and accuracy (WAIS Coding Score) (FIG. 2) in these Alzheimer’s patients at this time point as well as in patients with Parkinson’s Disease in the Parkinson’s arm of the study (See HERE). ANVS is a stock to watch because later this month or next month, we will see updated results from this clinical trial (See ANVS401 AD IQ card HERE).

FIG. 2. ANVS 25 day Alzheimer’s data

It should be emphasized that for ANVS401 (25 day ADAS-Cog and WAIS Score data in Alzheimer’s), simufalim (6 month ADAS-Cog and NPI data in Alzheimer’s), and Anavex 2-73 (14 weeks episodoic memory data in Parkinson’s (highly correlated to ADAS-Cog) (FIG. 3), this clinical data showed not only a slowing of deterioration of dementia, cognition, and/or motor skills, but an improvement at least over relatively short periods of time. As indicated, the market catapulted SAVA stock this year over 1000% after its report out of a 1.6 point improvement in ADAS-Cog11 in Alzheimer’s patients over six months of treatment with its candidate, simufilam (source). Of course, it should be emphasized that this is early data on a small number of patients. In fact, SAVA’s CEO recently was careful to note that data at 9 or 12 months would be more convincing that this improvement is not a placebo effect (See Cassava Sciences at the Raymond James 2021 Human Health Innovation Conference). And as indicated above, both SAVA and ANVS have noted weaknesses in each other’s data: SAVA’s CEO indicating that ADAS-Cog data at 1 month is not indicative of anything (Listen to Raymond James presentation above) and ANVS showing how much larger the ADAS-Cog improvement was for its drug than SAVA’s (See Press Release). Furthermore, currently approved Alzheimer’s drugs, such as the acetylcholinersterase inhibitor ARICEPT (donepezil), which was approved by the U.S. FDA in 1996 (See here), demonstrates improvement in ADAS-Cog out to at least 12 weeks (See FIG. 4). Thus, there is much more clinical data that needs to be generated, over much longer periods of time, to get a better sense for how well these new drug candidates compare to approved drugs. However, recently Biogen received Breakthrough Therapy Designation for its amyloid beta antibody candidate, Lecanemab (BAN2401) (See This Press Release), based on long-term data that showed slowing of dementia declines (ACOGS, and not improvement over time (See “Lecanemab at 10 mg/kg biweekly reduced clinical decline on ADAS-Cog14 (Fig. 4c) over 18 months, with 47% (P =0.017) less decline compared to placebo.” A randomized, double-blind, phase 2b proof-of-concept clinical trial in early Alzheimer’s disease with lecanemab, an anti-Aβ protofibril antibody).

FIG. 3 AVXL 14 week Parkinson’s data

FIG. 4 ACOGS from ARICEPT LABEL

Although at first glance, the mechanisms of simufilam, ANVS401, and Anavex 2-73 appear unrelated (See Table 2), there is at least one commonality: a multifaceted mechanism of action. In fact, simufilam and Anavex 2-73 are both classified as synaptic plasticity/neuroprotection disease modifying technologies (See Table 2 of Alzheimer's disease drug development pipeline: 2021), which may better explain the >100% increase in AVXL share price in early February 2021 when SAVA announced their data on simufilam. As indicated above, simufilam (formerly PTI-125) functions by restoring Filamin A structure in the brain, which in turn restores receptor and synaptic activities, reduces its α7nAChR/TLR4 associations and downstream pathologies, and reduces tau hyperphosphorylation, aggregated Aβ42 deposition, neurofibrillary tangles, and neuroinflammation (See simufilam in AD IQ card HERE and PTI-125 Binds and Reverses an Altered Conformation of Filamin A to Reduce Alzheimer's Disease Pathogenesis). Anavex 2-73 (blarcamesine) is an sigma-1 receptor (SIGMAR1) agonist. SIGMAR1 is a modulator of calcium homeostasis and mitochondrial function and reduces key pathophysiological processes in AD including hyperphosphorylation of tau, neuroprotection, and oxidative stress (See Anavex 2-73 2020 publication and see our Anavex 2-73 Alzheimer’s IQ card MOA). Activation of SIGMAR1 also leads to increase in autophagic flux, which can help keep neurons healthy. ANVS401 (posiphen) inhibits the translation of amyloid precursor protein (APP) and selectively inhibits beta-amyloid (Aβ) and beta-amyloid precursor protein (βAPP) production, which in turn inhibits production of neurotoxic fragments of APP (See 2019 INVESTIGATIONAL DRUG BROCHURE for POSIPHEN®). It is difficult to have too much confidence at this early point in whether ANVS401, Anavex 2-73, or simufilam will in the end, become approved game-changing Alzheimer’s drugs, but it is exciting for AD patients that compounds with these complex mechanisms are being analyzed in clinical trials.

SAVA's market cap is now hovering around $3 billion (Table 2) with an enterprise value of around $2.7 billion. AVXL has a market cap and enterprise value of around $1.5B. And ANVS's market cap and enterprise value sit at around $626M. All of these companies are pretty pure-play CNS companies (See BPIQ Pipeline images FIG. 5A-5C below), although AVXL has a Rett Syndrome orphan opportunity as well. Thus, currently SAVA initially seems pretty expensive relative to AVXL and ANVS. The market still sees a lot of risk in all of these companies of course, as their clinical programs are still early, and the value of an FDA-approved Alzheimer's treatment that could slow or even reverse some of the symptoms of this debilitating disease would likely lead to a market cap greater than $10 billion. Furthermore, the market likely sees more risk in ANVS currently, because its data is only for less than 1 month of treatment. And for AVXL, although it is impressive that a genetic marker was identified to identify patients that are much less responsive to Anavex 2-73, the genetic screen and further targeting of patients would leave out almost half the market (See 3.1.2 Effect size of THIS PUBLICATION - 9 of 21 were excluded). Plus, for AVXL, although as indicated above, there is data showing improvement of dementia in Parkinson’s patients, in their Alzheimer’s trial the data, although for a much longer duration of treatment, shows a slowing of clinical symptoms vs. a reversal/improvement (FIG. 6). Finally, all of these companies appear to have at least ~2 years of cash by their current burn rates, although any of them might still do a stock offering to raise money, as AVXL did recently, as their burn rate is likely to increase substantially if they move to the next stage of clinical trials.

As an investor, how do you process all this information? The most aggressive approach is to take positions in each ahead of their near-term report-outs, banking that with 3 shots on goal at Alzheimer’s (and probably Parkinson’s too) there is a chance of hitting at least one home run. Another approach is to look for dips in these stocks over the coming months or after the near-term report outs, that are not associated with a poor clinical result, and accumulate one or all of them over time.And finally, given the poor history of Alzheimer’s drugs and the run-ups in each of these stocks, one could take a bearish strategy by shorting one or more of the stocks, or bear options plays. For our Amp funds, we are already in SAVA and less-so in ANVS, and thus will likely take some SAVA profits and pull back our positions some as the data readouts come near. AVXL even at these levels looks pretty attractive to us, and this month’s Parkinson’s readout of more detailed data seems lower risk than the updates from ANVS and SAVA in Alzheimer’s. Thus, we will likely initiate a small percentage position in AVXL this week.

FIG. 5A

SAVA Pipeline on BPIQ.com (6/24/21)

FIG. 5B

AVXL Pipeline on BPIQ.com (6/24/21)

FIG. 5C

ANVS Pipeline on BPIQ.com (6//21)

FIG. 6

This article is NOT investment, tax, or legal advice. Please use this as a starting point for your detailed diligence and consult professional advisers before making investment decisions.

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