Sick Economics

Searching For Healthy Profits In The Stock Market


By Subin Im, PharmD


When it comes to treatment, Alzheimer’s disease has the most dire unmet needs. With 500,000 new diagnoses in the U.S. each year, Alzheimer’s is a terrible neurodegenerative disease that destroys memory and thinking, preventing people from completing simple tasks. The exact cause of Alzheimer’s is unknown, but it is thought to be due to a buildup of proteins that form amyloid plaque, which clogs up the space around brain cells. Alzheimer’s disease is extremely difficult to treat due to a murky diagnostic process, the lack of treatment options, and the struggle for drugs to get to the brain through the blood brain barrier. As a result of these challenges, many investors and companies have fled this therapeutic minefield. 

Before Biogen got the FDA approval on adacanumab to treat Alzheimer’s disease in June 2021, the last drug approval for Alzheimer’s disease was back in 2003. But adacanumab is the first medication to be approved for the treatment of Alzheimer’s disease that delays disease progression, whereas all the other medications prior were only approved for the symptom management of Alzheimer’s disease rather than for curative intent. Therefore, it was no surprise when Biogen’s stock surged by nearly 40% overnight when this drug got approved. However, now its stock price is even lower than prior to aducanumab’s approval. So what went wrong? 

Adacanumab works by removing a type of protein called amyloid that forms plaques around brain cells. If Alzheimer’s is supposedly caused by this plaque buildup, it would only make sense for Alzheimer’s to be cured by the removal of this plaque buildup. However, in it’s haste to cross the approval finish line, Biogen neglected to present firm evidence that plaque removal actually did improve cognitive performance for patients. It’s crystal clear that adacanumab removes amyloid plaques in the brain. What’s still not so clear is whether or not these patients can suddenly think clearly again. 

Another thing that is is very clear is that adacanumab creates some daunting side effects. Side effects described as “common” are brain swelling and brain bleeding. You don’t have to be a neurologist to guess that adacanumab represents some pretty risky business. Speaking of business, Biogen also provoked controversy by attempting to demand a premium price for it’s questionable new drug. While today’s price is “merely” in the $50,000 range, adacanumab attempted to debut with a price tag above $1,000,000. 

Faced with the facts above, many health professionals are hesitant to use adacanumab and think it should have never even been approved in the first place due to its questionable clinical benefit, vicious side effects, and high price tag. 

Is Biogen more than adacanumab? After all, it is a medication that tarnished Biogen’s reputation. However, there are other medications in the pipeline that could shape its trajectory even after its blockbuster multiple sclerosis medication, Tecfidera, came off patent, resulting in a 18% drop in the 2021 third quarter revenue. Below are three medications that could redeem Biogen’s reputation and attract investors. 

1. Lecanemab

Lecanemab is supposedly the new and improved version of adacanumab. Like adacanumab, lecanemab works by reducing amyloid plaques but in a slightly different way. Lecanemab targets the amyloid protein that hasn’t clumped up yet to form plaques, whereas adacanumab targets the plaques. Currently in phase 3, lecanemab is unlikely to gain much traction if its results aren’t convincing. If they are similar to adacanumab, it is in trouble as adacanumab’s sales came in at $300,000 during the third quarter of 2021, which is a dramatic decline from the expected $14 million. However, it does have potential as lecanemab’s trial data has already shown 25% less ARIA (amyloid-related imaging abnormalities) compared to adacanumab. This time Biogen may also do a better job of proving concrete clinical benefit for patients. 

2. Zuranolone 

Zuranolone is currently in phase 3 trials for major depressive disorder and postpartum depression. One of the major caveats to current antidepressants is that they can take four to six weeks for it to fully work and be effective. In some cases, it can take up to a few months. However, one of the biggest perks to zuranolone is that it is efficacious in 75% of patients after just two weeks with a robust, well-tolerated safety profile. Ironically, standard antidepressants can have the opposite effect than its intended use and actually lead to an increase in suicidal thoughts and actions. However, zuranolone did not lead to this side effect. 

With over 250 million people diagnosed with depression worldwide, the global market size is expected to grow at a CAGR (compound annual growth rate) of 5.4%, leading to an increase from $15.61 billion in 2021 to $16.44 billion in 2022. With zuranolone’s quick efficacy and relatively favorable safety profile, it could possibly reap in $3.288 billion if it were to just take over 20% of the market. 

3. TMS-007

Just like zuranolone, TMS-007 has a huge advantage with one of the most important determinants of health outcomes: the timing. TMS-007 is currently in phase 2 for the treatment of acute ischemic stroke by breaking down blood clots and inhibiting swelling from those clots. Although there are treatment options already available now, they can only be used if the patient presents to a healthcare facility within 3 or 4.5 hours of stroke symptom onset, depending on patient-specific factors. However, the “golden hour” with the most promising outcome is within one hour of symptom onset. Stroke symptoms are referred to as the acronym FAST: Facial drooping, Arm weakness, Speech difficulty, Time to call 911. 

TMS-007 can offer what money can’t buy: time. It can be used up to 12 hours after onset of stroke symptoms without resulting in a higher risk for bleeding in the brain. 46% of ischemic stroke patients arrive at the hospital within 3 hours of symptom onset, and 61% within 6 hours. In a phase 2 trial with TMS-007, the researchers noted, “The average time to treatment was 9.5 and 9.3 hours for patients who received TMS-007 and placebo, respectively. All patients who received TMS-007 were dosed beyond the time window of approved thrombolytic agents.”

This longer window for treatment efficacy automatically gears 39% to 54% of acute ischemic stroke patients towards TMS-007 if it were to get approved. With a CAGR of 4.13%, the global market for acute ischemic stroke medications is expected to reach $11.12 billion in 2027. Therefore, due to TMS-007’s huge advantage, 40% of the market could belong to this candidate, reaping in $4.448 billion. 

With its negative press on adacanumab and expiring patents on its blockbuster medications, Biogen is not the best choice for the short-term investor. However, with eight exciting phase 3 pipeline medications and 33 clinical programs, it has a promising long-term future that could make the current price a bargain.

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