The hunt for Alzheimer's treatments marked key victories this year, with breakthroughs from Biogen, Eisai and Eli Lilly. But investors in biotech stocks know the race for a cure for the memory-robbing disease is just getting started.
This summer, the Food and Drug Administration approved Leqembi, Biogen and Eisai's second Alzheimer's treatment. In its pivotal study, Leqembi slowed cognitive decline significantly, a triumph that reinvigorated the neuroscience industry. Lilly's rival drug donanemab, which is not yet approved, offered even more promising results.
Now, experts say the floodgates could open up. The science behind the groundbreaking drugs is pointing a way forward. And the medical advances are expected to boost funding for Alzheimer's treatment research — and lift the stocks of companies working on a cure for the disease that affects more than 6 million Americans.
"I think it's an incredibly exciting time," Prothena Chief Executive Gene Kinney told Investor's Business Daily. "I do believe these advances in medicine will help move the field forward."
Big Excitement Over Alzheimer's Breakthroughs
The first wave of Alzheimer's treatments focused on its symptoms. In the 1990s and 2000s, companies developed drugs that blocked an enzyme tied to the nervous system called acetylcholinesterase, says Dr. Bruce Albala, associate dean of innovation and clinical trials at the University of California Irvine School of Medicine.
Few companies were working on an actual cure, he says.
"At the time, almost no companies were working on it," Albala, who is also a professor of neurology, told Investor's Business Daily.
This year's breakthroughs are more significant, according to experts following biotech stocks.
What Causes Alzheimer's?
The new drugs were developed based on a hallmark of Alzheimer's disease: the buildup of toxic plaque in the brain, an abnormal protein called beta amyloid.
INmune Bio Chief Financial Officer David Moss says the science behind the amyloid thesis is based on "a couple of decades of history." Researchers "don't really know what amyloid does at the end of the day," he said. But targeting it in an Alzheimer's patient's system appears to slow cognitive decline.
Regulators have approved two Alzheimer's treatments that remove beta amyloid from the brain: Aduhelm and Leqembi, both from Biogen and Eisai.
Lilly's drug is expected to gain approval early next year. Biogen and Eisai's first drug, Aduhelm, got accelerated approval based on mixed results. However, Medicare refused to cover it broadly.
Leqembi offered a new hope. In patients with early Alzheimer's disease, the drug slowed cognition decline by 27% over 18 months. In a big win for Biogen and Eisai, the Centers for Medicare and Medicaid Services agreed to pay for the Alzheimer's treatment.
Lilly's donanemab appeared to be more effective. The drug led to a 29% slowdown in cognitive decline over the same time period. But donanemab has yet to be approved.
'An Amazing Moment'
Kinney, Prothena's CEO, portrayed the new treatments as revolutionary.
"There is a class of medicines that have demonstrated reducing amyloid beta in the brain leads to a meaningful slowing of disease progression," he said. "That's an amazing moment in the treatment of any disease. Alzheimer's disease was 100% fatal prior to these treatments."
INmune's Moss agreed, saying Biogen and Eisai did something no other companies have done — and this could help lesser-known biotech stocks shine.
"I think the beautiful thing about the fact those drugs got approved is it's the first time you had a disease-modifying drug," he told Investor's Business Daily. "It opens the door for investment for companies like us. Now we've shown there's a light at the end of the tunnel."
Focus On Better Alzheimer's Treatments
But it's still a long, uncertain road.
While considered significant breakthroughs, Leqembi and donanemab do not offer a complete cure. Both drugs slow cognitive decline. But they don't stop it.
Furthermore, Leqembi and donanemab are far from ideal treatments. Both require semiregular infusions and MRI scans to find amyloid in the brain. They also carry the risk of brain swelling that's often asymptomatic, but can be fatal. Patients would prefer treatments in the form of shots or pills, Aaron Mitchell, a principal with consulting and technology firm ZS, said.
"As much as these therapies are a breakthrough and really advanced the anti-amyloid cascade hypothesis, they're not perfect," Mitchell told IBD. "Both therapies have demonstrated a meaningful delay in progression, but they are far from being a cure."
Amyloid Removers
Biotech companies are exploring ways to improve the way amyloid removers work.
One goal is better safety profiles. Both drugs are tied to swelling in the brain known as amyloid-related imaging abnormalities, or ARIA. ARIA often doesn't carry any side effects. But it can be serious or deadly for specific patients.
Patients taking blood thinners and those with a mutation in a gene known as APOE4 carry a higher risk of experiencing ARIA after receiving amyloid-blocking drugs. People with that genetic mutation are also more likely to develop Alzheimer's disease at a much earlier age, well before qualifying for Medicare.
Lilly's donanemab removes beta amyloid at a faster clip than Leqembi. That could make it possible for patients to stop taking the Alzheimer's treatment once the amyloid is removed and still benefit cognitively, Leerink Partners analyst David Risinger said in a July report. Risinger follows pharmaceutical and biotech stocks.
There is one downside: donanemab leads to higher levels of ARIA.
"One of the goals is to find more potent drugs that could ultimately provide the same level of beta amyloid reduction without having the same degree of ARIA," says Kyle Rasbach, who manages the Healthcare and Life Sciences fund at Eventide Asset Management.
The Trailblazers In Alzheimer's Treatment
However, despite these challenges, the successes of new Alzheimer's treatments have created a stir in the biotech industry. Other biotech companies are looking to follow the lead of the Alzheimer's trailblazers.
Prothena's Kinney noted that even though Biogen and Eisai were first to market it doesn't mean they will ultimately be dominant. Prothena's bid to become a key player in the market hinges on its Alzheimer's drug's ability to block, not just amyloid, but also tau, another protein whose buildup in the brain is associated with the disease. The company is also working on several earlier-stage potential Alzheimer's treatments.
Companies looking to catch up or even overtake the likes of Biogen, Eisai and Eli Lilly can find encouragement from the history of the biotech market.
Take Amgen and Pfizer. The two companies jointly rolled out the first drug in a class that blocks a cytokine tied to inflammatory conditions like rheumatoid arthritis. Today, the bestselling drug in that class is AbbVie's Humira, which hit the U.S. market four years after Amgen and Pfizer's Enbrel.
Biotech Stocks Focus On Delivery
In Alzheimer's disease, biotech stocks could also benefit from new methods of delivering treatments. Leqembi requires an intravenous infusion twice a month, while donanemab is a monthly infusion.
But under-the-skin shots, known as subcutaneous injections, could offer a steep improvement. Patients would no longer need to drive to infusion centers and infusion centers could get back some of those chairs for patients with other disorders. Some companies are even working on pills to treat Alzheimer's disease.
Smaller biotech companies have also joined the fray.
Acumen Pharmaceuticals is working on an Alzheimer's treatment that selectively binds to specific molecules of beta amyloid. In recent tests, patients experienced a 25% reduction in beta amyloid plaques over six to 12 weeks. That compares well to about 20% for Leqembi at the same time, analysts with Leerink Partners said in a recent report.
Another small biotech stock, Vaxxinity is working on a vaccine that would block toxic forms of amyloid beta.
Vaxxinity Chief Executive Mei Mei Hu noted two forms of amyloid-related imaging abnormalities. The more serious form is known as ARIA-E, while ARIA-H "happens naturally and sporadically in older people," she told IBD. Vaxxinity reported promising results in a midstage test: its drug showed no instances of ARIA-E and "limited cases of asymptomatic ARIA-H."
But Biogen and Eisai had mixed results for a recent study testing a subcutaneous form of Leqembi. After six months of treatment, the shot led to a 16% lower level of amyloid than the infusion. However, patients also experienced an unexpected increase in ARIA. Biotech stocks Biogen and Prothena tumbled a respective 2.3% and 14.6% on Oct. 26 when the companies announced those results.
Looking Beyond Amyloid
Biotech companies are also exploring Alzheimer's treatments beyond the removal of beta amyloid.
Eventide's Rasbach said there's a "very clear linear correlation" between removing beta amyloid and slowing cognitive decline. He compared it to removing bad LDL cholesterol to lower the risk of heart attacks and strokes.
However, developing drugs that target beta amyloid may not be the only way forward. Combinations could also prove more effective — like in cancer and HIV. Adding drugs provides multiple ways of tackling the disease, assuming the treatments don't counteract one another or cause unexpected side effects. And such combinations could even prove to be the sweet spot for biotech stocks.
"The real breakthrough everyone is looking for is adding another disease-modifier that's not an amyloid modifier," said Albala, of the UC Irvine School of Medicine. "Do you add an anti-tau compound in combination with the anti-amyloid compound? Different people are looking at different approaches."
Untapped Vein
Thomas Cockram, a consultant with advisory firm LifeScience Dynamics, says exploring Alzheimer's treatments beyond the amyloid theory is a relatively untapped vein for biotech companies.
"There's a big scope for exploration outside of the amyloid-targeting world," he told IBD.
In fact, researchers are eyeing potential buckets of drugs, says Dr. Gary Small, chair of psychiatry at Hackensack University Medical Center.
One bucket could focus on amyloid blockers. Another class of drugs modulates a receptor of glutamate in the brain. Glutamate plays a role in synaptic plasticity, and the brain's ability to process memories. Many researchers are looking into the role inflammation plays in the brain.
Inflammation As A Critical Issue
Some consider inflammation to be a critical issue in Alzheimer's disease. INMune, a small biotech company, is trying to develop a weekly shot that would block an inflammatory cytokine known as TNF in the brain.
There are many drugs that block TNF, including blockbusters Humira, Remicade and Enbrel. But INMune's Moss says these drugs inhibit all forms of TNF, whereas INmune's approach only goes after "bad" TNF. The drug is currently in proof-of-concept testing.
Small of Hackensack University Medical Center says studies on anti-inflammatory drugs for Alzheimer's patients have yielded mixed results. But the work is clearly important.
"What I think, and others agree with me, is that reducing inflammation in the brain, early, could protect brain health," he said in an interview.
Biotech Stocks Under Pressure
Despite Leqembi's success as the first Alzheimer's treatment to gain both approval and CMS reimbursement, biotech stock Biogen has been under pressure this year. Shares have slipped about 20% on a year-to-date basis, as of mid-November,
Biogen predicts a slow ramp for Leqembi. Analysts expect the company to lose money on the drug this year before notching its first positive sales next year. The hope is that it will be a blockbuster by 2027.
Analysts are more bullish on Lilly's donanemab. The drug, which is expected to gain approval later this year, could generate $15 million in sales in the fourth quarter alone, according to FactSet. Analysts expect donanemab to be a blockbuster by 2025.
In fact, there's growing excitement about the growth of the Alzheimer's treatment market. Clinical Trials Arena projects the market to be worth $13.7 billion by 2030. Mitchell, of ZS, said he expects new players to emerge in a market that is poised to grow beyond the current competition between Biogen, Eisai and Eli Lilly.
"Do we actually think of this as more of a competition or is this really around creating a market?" Mitchell said.
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Closing In On A Cure
Roughly 55 million people globally struggle with Alzheimer's disease or other dementias, according to the World Health Organization. Biotech companies remain focused on a key objective: preventing any form of deterioration in the human brain.
"The real goal is to flatline (cognition)," said Moss, INmune's CFO. "You have to stop the (brain's) atrophy and the shrinking of the brain. We only have Phase 1 results, but what we've shown in our patients is we improved white and gray matter."
Decades ago, scientists believed it was impossible to repair and regenerate nerves, says Albala, of the UC Irvine School of Medicine. That's no longer true. But a key challenge remains, he said. "Can you slow the disease enough to allow the unaffected parts of the brain to take over and keep people functioning at their normal level?" he asked.
Despite their limited impact on biotech stocks, this year's breakthroughs offer plenty of hope.
"It's easy for me to say in 100 years we're going to cure this. You can't call me out on it," said Small, of Hackensack University Medical Center. "I always tend to see the cup half full. I think with the ingenuity of investigators and creative thinkers that we will come up with better, more effective ways to tackle these devastating illnesses."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
