Migraines affect perhaps a billion people the world over, and it's been three decades since they had a new preventative treatment option. That means there could be enough demand to drive blockbuster sales for a new class of treatments making their way to consumers right now, one of which could come from little Alder Biopharmaceuticals Inc. (ALDR).
The Food and Drug Administration recently approved Aimovig from Amgen (AMGN 2.35%) and Novartis (NVS 1.93%), the first of several high-profile new drug candidates with a similar mode of action. Teva Pharmaceuticals Industries (TEVA 0.63%) and Eli Lilly (LLY -2.63%) have sent applications for similar drugs to the FDA and Alder's starting to look like a terrier that showed up to a bullfight.
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Some of the industry's largest players have a head start on Alder, but there are reasons to suspect the underdog can carve out a modest portion of what could become an enormous market for preventative migraine therapies. If Aimoveg's commercial launch succeeds, it won't do much to move the needle for Amgen and Novartis, the pair generated a combined $74 billion in revenue over the past year.
Alder Biopharmaceuticals doesn't have anything to sell yet, and its recent $1.0 billion market cap could more than double in the years ahead if its lead candidate, eptinezumab, finds a place among migraine patients unsatisfied with available treatments.
A large poorly met need
Around 10% of migraine patients suffer headaches on more days than they don't, so acute treatments that dull the pain can lead to abuse and organ damage. There are treatments proven to reduce migraine days each month, but most patients quit therapy within six months complaining of too many side effects and a lack of efficacy.
An estimated 2.4 million Americans suffer from chronic migraines, and an eye-popping estimate from the industry-sponsored Migraine Research Foundation puts the annual economic burden at around $36 billion in the U.S. alone. Even the Institute for Clinical and Economic Review (ICER) thinks Aimovig's a pretty good deal. Using clinical trial data, the independent drug pricing watchdog showed that patients would end up paying around $130 for every migraine-free day gained compared to a placebo.
The ICER used a list price of $8,500 per monthly injection in its calculations, but Amgen decided to throw insurers a curveball and priced its drug at $6,900 per year. I think reimbursement could be an issue at any price because migraines are awfully painful, but they rarely result in expensive hospital visits. While insurers might appreciate drugs like Alder's and Amgen's, an estimated 2.4 million Americans experience at least eight migraines per month and at $575 per month, an effective preventative treatment could seem like a bargain to patients even if it's in a lousy copay tier.
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A better mousetrap?
Aimovig is just hitting the streets now, and Lilly could receive an approval decision for galcanezumab in June. Alder doesn't expect to send a submission for its migraine drug, eptinezumab to the FDA until the beginning of 2019, but its clinical trial performance suggests it could find a niche among the most severely affected patients.
Migraine trials are especially frustrating because attack frequencies and severity naturally vary from month to month. During the Promise 2 study with 1,072 patients that reported an average of 16.1 migraine days per month, though, Alder's candidate left little doubt about its efficacy. An impressive 15% of patients given its treatment had no migraine days at all, versus 5% in the placebo group.
During studies leading to Aimovig's approval, 41% of chronic migraine patients given a high dose of Amgen's drug cut their monthly migraine days in half at month three, versus 24% in the placebo group. That's a bit of a wider difference than eptinezumab scored on the same yardstick, but Amgen hasn't shared 100% responder figures.
Final thoughts
It's impossible to say without a head-to-head study, but it looks like Alder's quarterly infusion could find a place among the most severely affected chronic migraine patients. I don't think the company has a blockbuster drug on its hands, but annual sales approaching $500 million don't seem entirely unreasonable if approved. Biotech stocks tend to trade at mid-single digits of total revenue, which means a successful launch of eptinezumab could send Alder BioPharmaceuticals stock soaring over the long run.
With little else in its development pipeline, a surprise clinical trial catastrophe would lead to swift and heavy losses. A massive $587 million cash balance on the books at the end of March should help investors feel a bit more confident about holding this top migraine stock over the long run.
