30,000 is the New 30

’40 is the new 30′, ’50 is the new 30′, and so forth. We have become somewhat innured to the hopeful and/or desperate proclamations of time turned back on itself: 30 seems to be the modal choice of aspiration, epitomizing some idealized waypoint along the human lifespan, a Kodak/jpeg moment of post-adolescent, post-hookup, post-graduate, pre-arthritic, pre-plaque, developmental equilibrium. This conveniently overlooks the thirty-something angst of trying to juggle early professional aspirations and hierarchy-climbing, along with the chaotic demands of love and procreation.

’30’ in the pharma world used to be a billion dollars; the annualized benchmark for blockbuster status, the brass ring to be grabbed and clung to, if at all possible.
Now, an appraisal of deals and financings over the past eighteen months within the CNS sector suggests that there is a new ’30’, a new goalpost in a world where the goalposts are always being moved: 30,000 (plus or minus 5000, but that’s quibbling).  In an environment where going after mega-markets is a task thus far thwarted, such as in Alzheimer’s, or requires somehow leapfrogging a gaggle of generic predecessors, as in schizophrenia or depression, 30,000 has become a sought after hybrid: A big enough patient population to offer some volume of utilization, while small enough to not panic payors into adding yet another tier to their reimbursement schema.

Some examples of the new ’30′: SAGE Therapeutics estimates that there are 25,000 (close enough) cases of severe status epilepticus in the US each year. SAGE-547 in SSRE, just entering Phase III, has thus generated a market cap for SAGE that recently, albeit briefly, surpassed $1.7 billion. Auspex Therapeutics, now in Phase III with SD-809 for Huntington’s (about 30,000 patients in the US), was acquired by Teva for $3.5 billion. Avanir was acquired by Otsuka for $3.5 billion, and Avanir meets criteria by having tried Nuedexta in about 30,000 different clinical indications. Plus or minus 29,980.
With all due respect to the rare (3000) and ultra-rare (300), the sweet spot is 30,000, at least until someone cracks the code for a major disorder, like depression (well underway) or Alzheimer’s (no sign of this happening anytime soon).

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Aducanumab: Less Than Meets The Eye

The beta-amyloid target in Alzheimer’s has become, to put it politely, somewhat tarnished over the past several years. AN-1792, bapineuzumab, solanezumab, gantenerumab, plus several BACE and gamma-secretase inhibitors/modulators, have combined to form a conga-line of clinical disappointments, undulating its way into oblivion. There are a few plucky survivors: Lilly has launched solanezumab into another pivotal Expedition in spite of widespread concerns that it will again be ‘too little, too late;’ Merck’s BACE inhibitor continues in Phase III, as they hold their breath against the fear that the safety issues that have derailed several BACEi peers might yet come to haunt them as well.

And there is aducanumab/BIIB037, Biogen’s (via a partnership with Neurimmune) mAB against beta amyloid plaque (as opposed to soluble AB). The unveiling of the data from a 166pt trial that was powered to address safety, not efficacy, has been a triumph of effectively selective disclosure. Last December 3, Biogen revealed at a Deutche Bank conclave that they had achieved success in a Phase Ib trial, albeit without much in the way of detail. They were not particularly concerned about disclosure standards, and indeed, continued to disseminate more clues about the trial results at other investor gatherings, such as at a Cowen meeting in Boston. Finally, on March 20, they presented more, albeit still partial, data at the AD/PD meeting in Nice. The resultant headlines were bullish, and by the end of the day,  Biogen had added another $10 billion or so to its market cap. To put it in perspective: Biogen’s valuation on December 2, the day before their AD data drip began, was $72 billion. By the end of the day on March 20, it had gained another $39 billion. While Biogen has a wide and impressive range of programs, and is anything but a ‘one-trick pony;’ in NIR’s estimation, most of that rise (perhaps all, since it is in spite of countervailing concerns regarding their EU Tecfidera franchise) can be attributed to this Alzheimer’s news.

Think about that for a moment: $39 billion in added value, attributable to a trial that enrolled a total of 166 patients, wherein the dose-cohort sizes were 30-32, and one of those cohorts (6mg/kg) did even not have its twelve month data reported (though it apparently has been completed). That dose was added later because of safety/tolerability concerns, and a high discontinuation rate, seen with the highest (10mg/kg) dose.

Beyond confirming the power of suggestion, what does the data from this Phase Ib study establish?
1) Target-engagement: It does appear that aducanumab successfully engages with the amyloid plaque target in a clear, dose-related fashion. This is not a minor point; it has been often wondered how many CNS drug failures reflected the inability to get the investigational drug where it needed to be, in sufficient quantity. It is pretty clear that this mAb does reduce plaque significantly, and while we have sometimes wondered whether this might not be a good thing (in theory, might this free up soluble amyloid for further toxic binding within the brain?) there was nothing in these results that pointed towards an iatrogenic effect.
2) Clinical Benefit: This is where the variance in ‘audience’ response broadens. For the most part, the media ‘drank the Kool-Aid’ and asked for seconds. But some Alzheimer’s luminaries who are not amyloid acolytes turned a firm thumbs down, albeit not for attribution. Most of the reported (and that is considerably less than what has been collected) datapoints, i.e. the mean changes in MMSE and CDR-SB scores, (adjusted for covariates like baseline scores and APOE4 carrier status) fell in line with a dose-related curve, the impact upon deterioration rates seeming to rise with higher dosing. But there are factors that mandate caution in taking these numbers at face value and embracing these findings prematurely:
a) There were four dose levels, 1mg/kg, 3mg/kg, 6mg/kg, and 10mg/kg, all infused on a monthly basis. The 6mg/kg dose, which was added after the study was underway, did not separate from placebo at 26 weeks on the CDR-SB or MMSE, unlike the other doses. The 54 week data, not yet reported, may yet show that 6mg takes its projected place between the 10mg/kg and 3mg/kg doses in terms of associated impact on cognition/function. But since it diverges at 26 weeks, that cannot be assumed. Given the high variance on these outcome measures, it also cannot be automatically assumed that it is the 6mg/kg dose’s absence of separation that is the anomaly, given the amount of ‘noise’ in the dataset.
b) There is a lot of data missing, and how that missing data was handled adds to the ‘noise.’ The highest dose (10mg/kg) group was also the one with the highest rate of discontinuations due to adverse events, 31%, whereas only 10% of the placebo group discontinued prematurely. Given that it was the APOE4 group that tended to account for the dropouts in the 10mg/kg group, not surprising since they were the most prone to ARIA (amyloid-related  imaging abnormality, indicating vasogenic edema), this was the dose-group with the highest frequency of earlier-in-the-study clinical data being carried forward to the 54 week readout (LOCF, last-observation-carried-forward). Since this is the more rapidly-deteriorating group,  using LOCF means that their final results were recorded as being better than they would have been had they actually completed the study.  This is in contrast to the placebo group, where E4 patients of course did not receive the mAb, and thus were not preferentially more likely to drop out due to side effects. Instead, their deteriorating course was incorporated into the 54 week data; these two factors in concert would bias the comparison towards enhancing the apparent treatment effect.
c) Speaking of missing data: Where were the results from the other neuropsychological testing components (the NTB and FRCT) with their far more ‘granular’ assessment of cognitive functions? The similarity between the results obtained from the MMSE and CDR-SB is less validating than it might seem: Those two instruments overlap quite a bit, their results tend to be highly correlated, adding to the need for confirmation from these other, more sophisticated psychometric batteries.  Biogen intends to release those results in July, but with all due respect to giving the investigators multiple days in the limelight, there is no excuse for not disclosing and discussing those results along with the MMSE and CDR-SB. After all, the valuation gained thus far by Biogen on the basis of these preliminary results is larger than the annual gross domestic product of some 97 individual countries (International Monetary Fund). The scale is huge, the stakes are high, and Biogen–who we consider to be an exceptionally well-run and effective company–has been  surprisingly cavalier and selective in its dissemination of these trial results.

3) Safety: Vasogenic edema is better understood now than when the first mAb trials reported their results, and it is now known that it tends to be transient. As is not surprising, there was a considerable incidence of vasogenic edema at higher doses. Most cases (92%) emerged in the first five months of treatment; 35% of patients developed subjectively salient symptoms–headache, blurred vision; 78% were described as ‘mild to moderate’, which means that 22% were more severe, some requiring hospitalization.In the APOE4 carrier population, 55% of E4 patients receiving the 10mg/kg dose developed edema. 43% of the E4 patients receiving the 6mg/kg dose did, the incidence was far lower (5%) amongst E4 patients on the 3mg/kg dose. It will require a far better understanding of aducanumab’s efficacy at various dose levels, likely differentiated by APOE genotype, to sort out the risk-benefit profile for aducanumab, and the degree of tightrope-walking that might eventually be necessary to achieve therapeutic benefit with acceptable tolerability. How acceptable this kind of risk will be for a treating physician may reflect physician temperament as much as anything: Some consider this profile quite ‘manageable’, but there are risk-averse prescribers who could find it discomfiting.

The bottom line is that this was a Phase Ib trial with tiny dose cohorts, particularly when broken down by genotype. The antibody gets where it needs to go, and does reduce amyloid plaque levels. Keeping in mind the caveats noted above regarding missing data and high intragroup variance, the trends shown here are in the direction that one would hope to see from a trial. But it neither proves nor disproves the case for the amyloid hypothesis or for aducanumab. It provides a highly provisional hint of an efficacy signal: It could be statistical noise, but if so, it is well-behaved, generally dose-congruent noise. The unreported neuropsych testing data will be useful in assessing the validity of these findings. Biogen, in keeping with the example set by its peers, is planning to go into Phase III later this year. That should not be taken as inferring that this trial provided anything approaching Phase IIb POC. They will roll the Phase III dice, rather than spend two+ years trying to replicate it with a Phase IIb. They are banking on the hope there is something more substantial than noise behind these data.

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NeuralStem ALS Results

NeuralStem’s results from their 15pt, open-label trial of neural stem cells (fetal source) in ALS proved to be both ambiguous and controversial. Since there was no control group, NeuralStem parsed the treatment sample into two cohorts, those who appeared to have responded, as shown by relative stabilization on the ALSFRS and grip strength measures, and those who were deemed to be non-responders, because of their decline. This was excessively self-serving, because NeuralStem then compared these two groups on their outcome measures, even though the groups had been solely devised on the basis of…those same outcomes. This produced a circular logic chain: These patients did better on the outcome measures because they were treatment responsive, and they were treatment-responsive because they did better on those measures. NeuralStem has had a tradition of heavily emphasizing anecdotal reports of improvement, thus it is not particularly surprising that they tried to earnestly, and heavily, spin these results–though the net result has been one of both decreased credibility and a shock to their valuation.
The data disclosure was sparse, but doing some back-of-the envelope math based on what was released, it would appear that the overall mean group rate of decline on the ALSFRS was 1.61 points/month. There have been reports that the measured rate of decline in ALS has been reduced in recent years; a Phase II trial, reported by Miller and Moore in 2011, utilized 249 historical control patients who had displayed a mean rate of decline of 1.01 points/month. Compared to that relatively recent benchmark, the overall rate of decline for patients receiving injections of sixteen million NSI-566 cells each, was worse than that seen in that historical comparison.

We would not dismiss the possibility of a genuine responder/non-responder subgrouping of patients, even if we do not yet have an explanatory framework for that bifurcation. Comparing the seven ‘responders’ to historical controls, their decline rate of .02 points per month is indeed better than the aforementioned historical control group mean. And the nonresponder group’s decline rate of 3.0 points per month would be about triple the historical control rate. Thus, if one is going to take seriously the responder subgroup’s improvement, and describe it as potentially due to the cell therapy, one would also have to take seriously the finding that the majority of patients (53%) not only did not respond positively, but actually did worse than their historical control group, raising the possibility that the treatment might have contributed to that worsening (no causality can be established from this fifteen patient pilot study). If one were to take this trial data at face value, which is a dubious proposition, it could be interpreted as showing that NSI-566 slows progression in some patients, but accelerates it in others. If that were the case, prospectively identifying the differentiator would be of vital importance, because hastening decline in a rapidly-progressing, fatal neurodegenerative disorder would not be acceptable in clinical trials or practice. NeuralStem believes that there may have been a differentiation between groups in terms of illness stage, based on muscle function measurements, but this remains to be confirmed as a prospective screen. While NeuralStem and its chief investigator say they plan to initiate a larger, controlled study later this year, that statement may be premature. While NeuralStem claimed that the trial showed NSI-566 to be safe, that assertion speaks only to its observable adverse event profile. An acceleration of disease progression in more than half the patients treated would be a genuinely problematic safety issue, and until NeuralStem has sorted out that question, we believe it would be folly to launch another trial–one that indeed might have considerable difficulty enrolling patients.

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Alkermes Goes Dumpster-Diving

We recognize that Alkermes has no legacy of NCE discovery and development: Their corporate DNA is derivative, starting with the development of depot reformulations of existing drugs, moving on to modest molecular tweaks of known quantities. But still, there is something disquietingly uncreative in the announcement of their latest project, ALKS 7119. Alkermes has decided to combine two eminently imperfect compounds, dextromethorphan (altered to increase bioavailability, as Avanir did, albeit by a different means), plus ketamine, whose allure and shortcomings are well documented. Since the former is being developed for Alzheimer’s agitation, they believe 7119 should be developed for AD agitation; since the latter is being developed for depression, so too will 7119 be developed for depression. How the combo drug solves the tolerability issues often seen with dextromethorphan, and the psychotomimetic problems associated with ketamine, was not discussed, indeed it is almost certainly not yet known. Simply melding the receptor activation profiles of the two compounds does not automatically provide the “multivalent” best of each, minus its shortcomings.

With $800 million in cash, Alkermes could afford to generate truly innovative research and development. Instead, they like to go shopping at the molecular thrift store, believing that they can mix-and-match hand-me-downs to produce a stunning new ensemble. Maybe so, but our guess is that Naurex’s programs will render ALKS 7119 irrelevant for depression, and question whether adding ketamine (!) to reformulated dextromethorphan is guaranteed to improve on Avanir’s efforts in the area. Indeed, it could be argued that Alkermes’ task will be to find dosing that reliably produces a touch of calming dissociation in elderly patients, without triggering psychotomimetic destabilization.

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Targacept Finds Catalyst to Stop Its Bleeding

While not only not unexpected, but indeed inevitable, the news that Targacept is merging with Catalyst Biosciences (not to be confused–although it undoubtedly has been and will be–with Catalyst Pharmaceutical Partners) is an insipid and pathetic end to a story that once looked like a made-for-Hollywood epic success. Targacept was of course the RJ Reynolds spin-off, an attempt to take nicotine pharmacology out of the cancer ward, and stave off eons of tobacco-induced bad karma by turning it to the pursuit of medical advances (and profits). Targacept signed major deals with Astra Zeneca and GSK, and had what looked like, on the basis of Phase II trials, promising nicotinic candidates for both depression and cognition in schizophrenia. In January 2010, we wrote: “No CNS company had a better, more substantive 2009 than did Targacept.” It turned out that, while no one had a better year, Targacept’s was a lot less substantial than it had initially appeared.

Just a year later, in January 2011, when Targacept’s market cap was $800 million, NIR sounded a cautionary note: “Beyond waiting on TC-5214 and TC-5619, the biggest unanswered question for Targacept is–What will they do with that $268 million in cash? ….the next step in Targacept’s maturation may be a broadening of their portfolio beyond the mechanism upon which they were founded and have flourished. It may well be time that they diversify, hopefully expanding within the CNS area.”

That diversification beyond nicotinics never happened, and larger-scale, better-designed trials for both TC-5214 and TC-5619 eventually confirmed that Hint of Concept does not equal Proof of Concept. Fitting the nicotinic shoe to the gastrointestinal foot did not work either, the long slow exsanguination of their once-impressive cash position continued, and Targacept’s market cap shrank to $90 million. This brought Targacept to this ignominious end: Its shareholders will receive $20 million in cash, $37 million in convertible notes, and 35% of the combined company, which will have Catalyst management developing Catalyst’s products for hemophilia and complement-based disorders. If shareholders choose to convert their notes into stock, they will end up with 49% of the company.

There are several teaching moments to be distilled from this sad saga; this is a preliminary sample:
a. Having all of one’s corporate eggs in a single mechanistic basket is overly risky–and if there is cash to execute a rational diversification, that is an insurance policy that should be purchased.
b. Make sure that a lead compound does not have a major biochemical Achilles Heel.
c. Take care to choose the right endpoint (negative symptoms in schizophrenia are not the choice anyone else made) and the right population in terms of geography.
d. Relevant to point C: Do not run depression trials in India–and if this advice is ignored, it is preferable to be straightforward in disclosing the vulnerabilities of such a trial.
e. Again, HOC≠POC.

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Naurex and NRX-1074

Naurex reported today that the first efficacy trial for NRX-1074, using a single-dose IV administration of a compound that will be delivered orally from now on, established a remarkable degree of immediate impact. At 24 hours post-injection of the highest dose (and unlike GlyX-13, NRX-1074 does not have an inverted-U dose-response curve), the mean reduction in Hamilton scores was 14 points, the effect size was .88.  The effect size itself, just 24 hours later, is impressive compared to current antidepressants. It was also pleasantly surprising that 72% of patients receiving NRX-1074 showed a ‘clinically meaningful’ response, given that in rapastinel/GlyX-13’s PhIIb, only about half of the patients appeared to be treatment-responsive. The usual caveats–small treatment samples for each of the three doses, 35 patients; just a single-dose readout; IV delivery of this oral compound–do apply, and the data release did not offer anything regarding the durability of the antidepressant response. However, durability is far less important here than it was with IV GlyX-13, for which minimizing the frequency of re-infusion would be an important treatment consideration. These data at 24 hours suggest that once-daily administration would be viable, the sweet spot for an oral antidepressant. The next clinical step (starting this spring) will be a repeated-dose, oral administration trial of NRX-1074, as monotherapy– in contrast to GlyX-13, being developed as an adjunct. As to the next corporate development step, it seems a near-certainty that Naurex will go the IPO route to funding their ambitious clinical development agenda–the question to us is not whether, but when.

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A Momentary Lapse of Reason*

*Floyd, P.  1987

Every now and then, pharma/biotech companies do things that suggest that they had experienced a transient ischemic attack against their better judgment. Today there were two such events in the news:

1) Biogen-Idec and BIIB037

Biogen-Idec is one of NIR’s favorite companies,  they have planned and executed better than almost anyone else in the neuro area. So when they make errors, those mistakes  perhaps are magnified by the contrast with the Company’s usual high standards. First, they disclosed vague but intriguing results for this monoclonal antibody against an undisclosed epitope of beta-amyloid, stating that patients after 54 weeks of treatment showed decreased plaque load and improved cognition.They are sufficiently impressed that they plan to now go directly into Phase III from a trial that was originally, but not entirely honestly, labeled as a Phase I.

Today’s news involved a few frontal function lacunae: Our first comment is that this news came at a presentation at the Deutsche Bank BioFest investment conference, and was not accompanied by a corporate press release; company spokespersons only made further comments in response to press inquiries. This is selective disclosure of material information, and if anyone doubts that it is material, note that the Market added $5 billion to Biogen-Idec’s market cap today, which qualifies as material in our view. Secondly, in their public description of the trial, Biogen-Idec had disclosed only plans to assess biomarkers; scans of AB plaques, blood levels of antibodies. Now, it turns out that they were also conducting cognitive testing of some kind, which means they had withheld relevant information about the trial protocol. It should be beneath Biogen-Idec to play petty games with this kind of information.We are also unimpressed with their plan to not disclose the full data until a conference sometime in 2015. Private companies can get away with delayed disclosure, but a public company, with this much riding on skimpy and selective disclosure  should not. Perhaps the analysis is not yet complete, but they do have more detail that could have been provided– What were the cognitive testing results that inspired a Phase III go decision? What was the actual rate of vasogenic edema in APOE4 patients, in non-APOE4 patients?

Finally, and this is more ambiguous, we always have a moment of vertigo when a company skips doing a real Phase II and just goes directly into a several hundred million dollar Phase III in Alzheimer’s, particularly when they cite beta-amyloid plaque reduction as a key biomarker finding. It has  not worked out well in the past, and while Biogen-Idec is in good company (e.g. Merck, Lilly/AstraZeneca, Roche) in choosing to shave off two or three years off the development timeline, the added risk is not to be dismissed. That’s a judgment call in terms of risk-benefit, whereas the first three issues, the informational omissions, are not judgment calls, they were mistakes.

2) Otsuka is buying Avanir for $3.5 billion

Someone’s lithium level needs to be checked. By the press coverage, one would think that Avanir possesses some kind of broad and deep neurology pipeline that would complement Otsuka’s psychiatry assets. They do not, they mainly have Nuedexta, the quinidine-enabled version of dexmethorphan, and while Adam Feuerstein’s (Street.com) denigration of Nuedexta as ‘cough syrup’ is overly harsh, Avanir’s  deepest expertise is in clinical testing in a plethora of disorders, as they have done with Nuedexta (aka AVP-923) and its deuterated cousin, AVP-786. The recent Phase II data in Alzheimer’s agitation was intriguing, the first time that Avanir has presented something that approximates a real opportunity. But their Nuedexta sales, with pseudobulbar affect the only approved indication, just reach $100 million annualized. The Optinose sumatriptan product that they acquired this year looks distinctly unpromising to us, and the FDA was less than enthused, rejecting the NDA.

How does this translate into $3.5 billion? In our opinion, it does not, the valuation had already become prematurely inflated post-AD data, and this just takes it to ‘could this be a sign of a bubble?’ proportions. If Otsuka, which has had a strong record in psychiatry, wants to become a significant player in neurology, there were several cheaper, deeper, better routes to that end. To the media outlets who issued half-witted headlines like “Are Avanir Shareholders Getting Enough in the Buyout?”, we can only say that when Christmas comes early, it’s greedy to ask why Santa didn’t throw in a Lamborghini for good measure.


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