On November 6, 2020 an advisory committee to the Food and Drug Administration (FDA) assembled to analyze Biogen’s clinical trial data for aducanumab, the company’s experimental treatment for Alzheimer’s disease. Aducanumab, a monoclonal antibody that targets the classic beta-amyloid plaques that are found in the brains of people with Alzheimer’s, began what was to become an epic journey to regulatory approval in March of 2015. Despite a canceled Phase 3 study in October 2019 due to unconvincing data, Biogen remained true to their mission and sought regulatory approval following reanalysis of the data and a second pivotal study. The FDA’s internal clinical review team deemed Biogen’s second set of supporting data as strong enough to justify approval, however an independent panel of 11 experts came to the opposite conclusion. It wasn’t even close. Ten out of the eleven panelists voted that Biogen did not sufficiently prove aducanumab’s efficacy. How could these two groups arrive at such differing conclusions?
The market reacted extremely positively to the FDA internal committee’s recommendation that aducanumab be approved for human use, with Biogen shares (NASDAQ:BIIB) up 44% on Wednesday, November 4 to a high of $359.93. In hindsight this was extremely premature, and investors were probably unaware that a second analysis performed by an independent group would weigh in on the final decision. Trading on the market paused on the day of the hearing, but in after-hours trading the stock was down more than 31%. Successful approval of an Alzheimer’s treatment would disrupt an enormous market. The Alzheimer’s association estimates that 1 in 3 seniors die due to the disease or some other form of dementia, with over 5.6M Americans currently suffering. The association expects this number to increase to 13.8M by 2050. The last drug approved to treat Alzheimer’s was Namenda (approved in 2003), which was found to be effective only in patients with severe Alzheimer's, with many failed attempts to create another treatment since. If aducanumab could successfully reduce the progression of beta amyloid plaques the drug could be worth more than $5B per year, according to Evaluate Pharma.
There are two other clinical stage companies addressing Alzheimer’s disease: Denali Therapeutics (NASDAQ:DNLI) and Alector (NASDAQ:ALEC). Denali has partnered with Sanofi (NASDAQ:SNY) to develop their lead drug candidate against Alzheimer’s, DNL788, a small molecule inhibitor of the RPIK1 enzyme that drive brain inflammation and contributes to neurodegeneration. This mechanism of action is not the same as Biogen’s aducanumab, and could possibly be used in combination to hit brain degeneration with a 1-2 punch. Denali also has a partnership with Biogen to develop a treatment for Parkinson’s disease, with Biogen paying Denali close to $1B to further their research. Shares of Denali have reacted positively to the FDA's initial critique of aducanumab, and I think that it is safe to say that if Biogen experiences success then the FDA may pay more attention to competing technologies and the market will react favorably. Similarly, Alector’s lead monoclonal antibody “AL002” functions by a different mechanism. It is reasonable to assume that if aducanumab is approved then the entire market sentiment will shift in favor of Alzheimer’s treatments. Conversely, if the FDA agrees with the independent advisory panel’s advice then sentiment may shift in the opposite direction. The fate of these two competing companies will be very informative about the future of neurodegenerative drugs. A final decision by the FDA is expected by March 7, 2021.
It is clear that the FDA is caught in some sort of moral quandary… Alzheimer’s is a debilitating disease and more treatments need to come to market. But the approval process requires that the experimental drug to meet pre-determined efficacy endpoints (to be negotiated with the FDA ahead of time and based upon the criteria used to evaluate other drugs in the same disease area). Can a small effect size warrant approval if the treatment options are limited? I believe that the Agency desperately wants a new Alzheimer’s treatment to hit the market, and is erring on the side of “well if it’s proven safe why not offer it to patients with no other options?” The FDA’s stance on compassionate use and expediting drugs to market has varied over the years and is highly influenced by the public’s sentiment. My opinion is that if the treatment is safe then we should reserve it as a last resort for patients suffering from this incurable disease. I will continue to keep a close eye on Biogen and its two main competitors, Denali and Alector. I eagerly away the FDA’s final decision in the 1st quarter of next year.
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