3 Drugmakers on the Move

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Degenerative central nervous system, or CNS, disorders such as Alzheimer's and Parkinson's diseases are notoriously difficult to treat, and they represent vastly unmet medical needs. Central nervous system disorders can affect a person's memory, ability to learn, communicate and even carry out daily activities. Unfortunately, current therapies focus solely on alleviating symptoms, and even then, these treatments tend to be only moderately effective at doing so.

Nonetheless, Alzheimer's drugs still raked in more than $4 billion in sales in 2012, despite their glaring inadequacies in terms of long-term effectiveness. Because of the strong market opportunity for CNS disorders and the general need for new therapies, drugmakers are racing to develop the next generation of CNS drugs, with a whopping 102 clinical candidates currently under development for Alzheimer's disease alone.

With that said, here is a look at 3 CNS drugmakers that have been having banner years.

Acadia (NASDAQ: ACAD  ) has been the darling of the biotech world since announcing successful top-line results from its late-stage trial for pimavanserin, a treatment for Parkinson's disease psychosis, or PDP. The late-stage trial showed that pimavanserin met its primary endpoint of antipsychotic efficacy, and a key secondary endpoint for motoric tolerability. Based on these results, Acadia has decided to file a New Drug Application, or NDA with the FDA for pimavanserin late next year.

At present, shares of Acadia are up more than 300% this year, pushing the company's market cap close to $2 billion. My take is that this run up is a bit overdone, and you might want to wait for a pullback before jumping into Acadia. The drug's possible approval is still well over a year away, and Acadia is essentially funding its operations through public sales of stock.

Prana Biotechnology (NASDAQ: PRAN  ) shares have been marching upward ever since initiating a mid-stage trial for its Alzheimer's drug PBT2 earlier this year. Specifically, shares are now up 115% this year, and volume has been increasing at a steady clip as well. The mid-stage trial for PBT2 is called the IMAGINE trial, which is testing the effect of PBT2 on amyloid deposition in the brains of patients with prodromal or mild Alzheimer's disease. A total of 40 patients are expected to be enrolled, with results to be announced in March.

Patients who complete the IMAGINE trial can subsequently enroll in an open-label Extension study, expected to last an additional 12 months. So far, 24 out of a possible 29 patients have elected to enroll in the open-label portion of the study.

What's the big deal? Firstly, the scientific community has taken note of PBT2, naming it a Top 10 Global Neuroscience Project. But what investors are excited about is PBT2's value proposition.

Prana has a tiny market cap that is only now inching its way toward $200 million, and if PBT2 were to receive approval, the drug could easily see sales in the billions due to the sheer lack of effective Alzheimer's treatments.

Foolish investors should exercise caution with this compelling story, however. While positive mid-stage results will definitely be a boost to the share price, negative results would likely drop shares back to their pre-run up levels. My take is that there could be plenty of upside remaining in Prana after announcing positive mid-stage results, so the risk of jumping in early outweighs the potential reward.

Sangamo (NASDAQ: SGMO  ) is developing a gene therapy for the treatment of Alzheimer's disease called CERE-110. The idea is to deliver a nerve growth factor to the brain of Alzheimer's patients in hopes of stabilizing brain metabolic activity.

Sangamo recently completed an early stage trial of CERE-110, where data from PET-scans measuring glucose use suggested this approach may slow cellular deterioration in the brain. These data were presented at a Sixth Clinical Trials on Alzheimer's Disease (CTAD) Meeting last week, and Sangamo shares jumped almost 6% as a result. Sangamo is thus proceeding with a mid-stage trial to be funded by a grant from the National Institute on Aging, which is part of the National Institutes of Health.

While these early results are definitely encouraging, you should temper your expectations in terms of CERE-110 as a value driver. CERE-110 is still in the early throes of development, and a lot can still go wrong as a result. And personally, I'm rather wary of biotechs with $500-million-plus market caps and no late-stage clinical candidates, such as Sangamo. Such scenarios are hard to view as value buys, and come with too much risk for my taste.

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Read/Post Comments (4) | Recommend This Article (70)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 22, 2013, at 7:03 PM, fwrobinson wrote:

    When considering whether to jump in earlier or late on Prana Biotechnology, consider these things.

    On November 15th, Prana responded to a media segment with which it had no part in, that was an obvious journalistic patching of comments about other trials going on at the Caulfield Hospital of Australia, that is indeed one sight of the IMAGINE trial. Some parts of that clip are Dr. interviews and presentations apparently regarding SOLA trial, and mentions recruiting for a 2000 participant trial that is also likely geared to Sola Trial participant recruiting, however, there is a personal patient testimonial that is not only is clearly a testimonial on Prana Biotechnology's drug, PBT2, based upon the photo of the capsule bottle, and footage of the patient taking the capsule (Sola's drug is not a pill or capsule).

    Prana Biotechnology in their ASX disclosure and response to the segment clarified that indeed the person interviewed was an IMAGINE trial participant. PBT2 was described by the patient, and his wife as a Godsend.

    Additionally, Prana's PBT2 has already shown significant executive function improvement in humans and near significant cognitive improvement in a prior 12 week trial. In how many trials are you going after confirmation (not first occurrence) under a longer time period trial?

    Further, on Wednesday, October 30th, Prana Biotechnology release results of a study - headlined: Prana's PBT2 Reverses Memory Loss in Normal Aging.

    "My comment - it not only helps normal aging - new nerve cells/Neurons were created!"

    The paper, entitled "A Novel Approach To Rapidly Prevent Age-Related Cognitive Decline", appears in the journal Aging Cell. The authors were led by Associate Professor Paul Adlard, Head, Synaptic Neurobiology Laboratory, The Florey Institute of Neuroscience and Mental Health.

    "It is very exciting to discover that PBT2 not only helps clear amyloid from the brain, but is promoting the birth of new nerve cells in a part of the brain that is particularly affected by Alzheimer's disease, the hippocampus. This now adds to the predicted beneficial properties of PBT2 for the treatment and prevention of Alzheimer's disease," commented Dr Rudy Tanzi, Professor of Neurology at Harvard Medical School, Vice Chair of Neurology at Massachusetts General Hospital, and Prana's Chief Scientific Advisor.

    The question I pose to the early investor that might like to ignore a finding such as this because it was a mouse study!

    How many mouse study results come along where the same compound, PBT2 has successfully completed a 6 month phase II trial for Huntington's Disease and are now awaiting results in early 2014, with safety and tolerability (the primary endpoint) nearly assured by the fact the IMAGINE Alzheimer's trial length is twice as long (1 year), the first patient dosed in IMAGINE will complete dosing in 7 days from today, with an approved one year extension trial of that same drug already having the first patient dosed 17 weeks ago and with 24 of 29 participants opting the extension, and the only ones to pass up the extension were among a group for which there was up to a five month time lag between their trial completion and announcement of the extension.

    How many such drugs are going for disease modification (unlike Acadia's Primavanserin that is symptomatic) in the largest market that has no approved disease modifying drug, using an upstream approach effective across multiple neurodegenerative diseases, and that might also be effective against the cognitive decline associated with normal aging!

    And with respect to drawing a few other obvious comparisons between Prana and Acadia:

    Acadia's candidate treats Parkinson's psychoses, while Prana has a disease modifying Parkinson's drug candidate funded through the MJFF 2011 Therapeutic Drug Pipeline Program, scheduled to enter first in human studies in 2014.

    Acadia's candidate Primavanserin is hopefully to be expanded to treat psychosis in AD patients, however, Prana has a disease modifying drug candidate that if cognitive and executive function improvement is shown may qualify for acceleration to market under the new FDA guidelines.

    Prana's market cap is under 200 million on disease modifying drug pipeline with under half as many shares outstanding as Acadia, compared to Acadia's 2 Billion market cap on the potential of their symptomatic drug candidates.

    It is quite possible that not only should Prana have the 2 Billion market cap, but their shareprice would over twice that of Acadia Pharmaceuticals should the true value be soon recognized, and forgive any bias, this foolish contributer has owned both stocks, and agrees with the general consensus of this article regarding both stocks, but feels that it is clearly the early bird that will get the worm on this one.

    In ending, this contributor particularly likes that Renaissance Technologies Hedge Fund perhaps agrees with me by becoming the largest institutional ADR holder as of the recent November 15th reporting deadline, not to mention Goldman Sachs this quarter as another New institutional older.

  • Report this Comment On November 22, 2013, at 7:38 PM, Cado05 wrote:

    1)According to Alfredo(Assistant Professor in Neurobiology): untreated R6/2 in PBT2 paper have MUCH lower performance than same mice in clioquinol paper, this inflates effect of PBT2,that would be a big concern of him in interpreting PBT2 results

    Neither $RPTP nor $PRAN compounds are as effective as Remacemide+Co-enzymeQ10 in mice.

    2) GoldmanSachs bought 6M Ariads shares for $20/share, few weeks later Ariad shares collapsed to $3, so this isn't good example to buy PRAN

  • Report this Comment On November 22, 2013, at 11:57 PM, andybaron wrote:

    Your coverage of Sangamo was surprisingly limited to CERE-110, which is a program that came to Sangamo very recently through an acquisition and is not generally cited as an important driver toward profitability.

    Sangamo will soon be reporting results from Phase II studies on treating HIV by modifying T-cells to become impervious to the virus.

    The company recently announced that their pre-clinical Huntington's treatment has not only been shown to suppress the production of the toxic mutant huntingtin protein without suppressing production of healthy huntingtin, but also has show significant positive behavior changes.

    In the next hear, Sangamo will submit 4 applications to initiate human testing: two for hemophilia cures, one for a stem cell HIV cure, and one for curing hemoglobinopathies such as sickle cell and beta thalassemia.

    The hemophilia trials will test a new platform that uses a small percentage of the liver's albumin producing cells to replace any missing enzyme.

    Sangamo's recent price move has little to do with CERE-110

  • Report this Comment On November 23, 2013, at 2:37 AM, DavidSSaville wrote:

    Comments regarding speculative nature of PRAN/PBT Australian Biotech Prana.

    Please perform your own DD.

    Please read excerpts on AU site hotcopper or on Yahoo message board. After done please visit and read info on Prana homepage.

    Since I am touting, I will just say that it is better to have 100 shares in your portfolio then none.

    I sincerely expect Prana to have the first Alz drug on the market that will result in a phenomonol return.

    Even if you choose to sell once the positive results come out at least you will gave garnished a very nice return for what I truly believe is 0 risk!

    But you be the judge of that!

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