Diagnosing Alzheimer's First

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Alzheimer's is a debilitating neurodegenerative disorder affecting approximately 5 million Americans, yet its causes are remarkably enigmatic.  Nonetheless, pharma and biotech companies continually throw money at potential blockbusters that lack innovative scientific forethought and inevitably fail to meet primary endpoints in clinical trials.  Their gamble is over a piece of the $203 billion pie that the Alzheimer's Association estimates as a 2013 cost of care (rising to an astounding $1.2 trillion in 2050).  In the spirit of President Obama's Brain Initiative, the private sector should instead invest in the development of novel diagnostic tools to better define potential drug targets and disease progression.

Recent trials

Just this month Baxter International (NYSE: BAX) announced results of its Phase 3 trial examining the effects of Gammagard, an immunoglobulin bolus from healthy donors aimed at clearing amyloid-beta from the brain before it aggregates into neuron-killing plaques.  Gammagard failed to meet its primary endpoint of an improvement in cognitive or functional deficiencies in patients diagnosed with Alzheimer's.  It did appear to at least slow the progression of cognitive decay over the course of the trial, but those results were not statistically significant.  Baxter is still contemplating the fate of Gammagard for Alzheimer's treatment.

Such was the fate of Eli Lilly's (NYSE: LLY) solanezumab, which failed to meet primary endpoints but showed promise for a pre-specified secondary outcome, a slowing of cognitive decay with time, as well as a reduction in some, but not all, biochemical markers of disease.  This result was as positive as the field has seen for some time, and the stock rallied on the announcement that the EXPEDITION trial would be extended as a longitudinal study of disease progression and drug safety over extended periods.   

Comparable results have been seen by other groups like Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ), who discontinued trials of their intravenous drug bapineuzumab after it failed to reach similar endpoints last year.  Those trials looked specifically at patients both with and without a gene that enhances the likelihood of disease.  Further trials using alternative methods of drug application are still underway. 

In summary, large investments in novel drugs have produced incremental advances in Alzheimer's treatment, but have not yielded the blockbuster investors are hoping for.  Perhaps it is time to step back and reevaluate short-term goals in the context of long-term investments in drug discovery.

Can diagnostics generate revenue?

Classically, Alzheimer's diagnosis was based purely on behavioral and cognitive deficiencies, which only manifest after marked neurodegeneration.  Genetic advancements have identified certain markers for predisposition, and the clinical trials for Gammagard, solanezumab, and bapineuzumab accounted for these genetic influences.  Unfortunately genetics are not a perfect indicator of disease risk, and more directed molecular diagnostics would be highly valued. 

Eli Lilly has made strides in diagnostic development with the recent purchase of two PET markers for tau tangles from Seimans Medical Solutions USA, Inc.  Initially Eli Lilly plans to use these markers in R&D to rationally develop and monitor a new class of drugs that target tau protein, rather than amyloid plaques.  These acquisitions come on the heels of FDA approval for Amyvid in 2012, a molecule which highlights amyloid in PET scans.  This shift in short-term thinking signals potential long term advancements in targeted drug design. 

Eli Lilly may also choose to follow the path of GE Healthcare and license the imaging tracer for use by other companies in R&D.  GE licensed the amyloid tracer flutemetamol to Merck for development of their oral amyloid precursor inhibitor.  The deal allows GE and Merck to co-develop their products as potential companion molecules to be marketed together.

In the meantime, Eli Lilly reserves the right to market their diagnostic molecules commercially.  The market for such molecules may actually be significantly more robust than the Alzheimer's population alone.  A recent Harvard study suggested that 2/3 of healthy individuals would take a precautionary Alzheimer's test were one made easily accessible.  A PET scan is likely beyond the accessibility they had in mind, but the statistic highlights the profitability of a reinvigorated focus on diagnostics.

The industry as a whole should follow Eli Lilly's lead and invest in technology for early detection.  It will enhance R&D capabilities, while simultaneously providing revenue.  Successful therapies will come naturally after.

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Seth Robey has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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