Alzheimer’s Disease always gets a lot of attention from newsletter publishers, readers and investors — not only because we all know someone who suffers from this terrible malady, but because we know that the current treatments are ineffective and the market is huge… which means that any real solutions or more effective treatments could create tremendous profits for the companies who discover and market them.
That’s been far more often promised than realized, however, as Alzheimer’s Disease has proven to be a tough nut to crack — not only because of the fact that you’re dealing with peoples brains and the side effects can be frightening, or because success or failure is often measured with pretty squishy instruments that try to standardize patient reactions when it comes to memory and the ability to deal with daily tasks, but also because there’s still a lot of uncertainty about how Alzheimer’s works, what causes it, and what might slow it down or reverse it.
The huge market and the huge human need keeps researchers going, of course — and it keeps pharmaceutical companies investing, even after decades of billion-dollar losses on failed late stage Alzheimer’s Drugs from some of the biggest companies in pharmaceuticals… hope springs eternal, thankfully, so hopefully we’ll soon see some far better drugs or treatments as our largest generation heads into its high-risk Alzheimer’s years.
And Dave Lashmet is pitching an Alzheimer’s Breakthrough to entice subscribers to sign up for Stansberry’s Investment Advisory … so what is it that he’s talking about? Here’s a bit from the order form:
“Profit from the Greatest Medical Breakthrough of the 21st Century
“By July 16th, we expect a major announcement on the biggest breakthrough for Alzheimer’s Disease EVER. Investors who get in before this date stand to gain the most — but you must act now…”
And Lashmet says he’ll be at the meeting in London where the latest news on this breakthrough is announced, and will be reporting directly to subscribers… but it’s also an ad for Stansberry’s Investment Advisory, not for Lashmet’s much more expensive Stansberry Venture newsletter, so presumably it’s a pretty large company (generally, they use their pricier newsletters to recommend smaller, more obscure or more illiquid stocks).
He refers to the drug as “B-37”, and this is the sum-up from the order page:
“Once an announcement is made, this stock could move quickly. All you need is a standard brokerage account to get started….
“Why the science behind B-37 is different than any treatment for Alzheimer’s before.
Our top medical and financial analyst, Dave Lashmet, dedicated four years of his life to tracking this new drug, meeting with the top neurologists in North America, PhDs at Harvard, and scientists from the most successful pharmaceutical companies in the world. You’ll find out why this drug works while hundreds before it have failed.”
So that’s probably enough to feed into the Thinkolator, but let’s check a few more clues…
He shows a series of MRI scan images of brains with “before” and “after” images of the plaque that is believed to cause Alzheimer’s Disease, with this sum-up….
“Notice, the plaque is all but gone in everyone, except the person who got no drug.
“These results are unprecedented in the history of treating this disease.
“Patients taking this new treatment wiped away 20 years’ worth of Alzheimer’s plaque in just 12 months.”
So… that sounds pretty exciting, and it did indeed get plenty of doctors excited and hopeful, there are several quotes from experts in the field about how promising and significant those results were (more on that in a moment).
And we’re also told that this drug is getting the green light treatment from regulators:
“This new blockbuster drug has already received what’s known as “Fast Track” designation from the U.S. Food and Drug Administration, so it can move through clinical trials quickly and get in the hands of patients who desperately need it.
“The European Medicines Agency granted it an even higher status — “PRIME” — for priority medication. It means European regulators will help oversee these trials.
“Keep in mind: This is the first and only neurology treatment to ever receive this relatively new program’s PRIME designation.”
So we’re really left with an embarrassment of riches when it comes to this “secret” stock, and I suspect many of you have already identified it… but here’s one more bit:
“The company behind this new drug is going ‘all-in’ to prepare for future sales. They know they’ve got a game-changer in the first drug to successfully treat Alzehimer’s.
“For example, the company started by buying up a $75 million factory in North Carolina to jump-start production. And they recently broke ground on a $1.4 billion plant to produce the drug on a massive scale.”
So who are we being teased about here? This is biotech giant Biogen Idec (BIIB), which has grown over the past decade mostly on the strength of their several multiple sclerosis drugs, but has recently seen some worrisome possible competition creeping up in that area from Celgene (though Biogen also recently launched Tecdifera in that market, which is keeping their growth going as Avonex and Tysabri age), and is seen by some as having a relatively thin pipeline when it comes to late-stage drugs.
But the real game changer, of course, would be if their Phase 3 Alzheimer’s Disease drug does indeed turn out to be a huge hit — since that would, one imagines, have the potential to be one of the best selling drugs of all time.
That drug Lashmet is hinting at is aducanumab, a monoclonal antibody that they developed with Neurimmune (which discovered it and partnered it with Biogen ten years ago) — and no, Stansberry didn’t try all that hard to make this teaser impenetrable… they even used the same number, the identifier that Aducanumab has carried over the past decade is BIIB037, so “B-37” isn’t such a stretch.
If you’d like to get a handle on the drug and on expectations for it, most of the excitement came from releases from an earlier stage clinical trial last year that generated a lot of news coverage (and a bit of a pop in Biogen’s share price). The excited quotes from doctors that Lashmet uses in the ad mostly came from those stories in 2016, so I’d suggest reading those before you start to build a little understanding of the stock and the drug and the potential.
Biogen’s only has three drugs in phase 3 clinical trials right now, and one of the others is also aimed at Alzheimer’s Disease, that being their BACE1 inhibtor E2609 (a collaboration with Eisai).
So what’s the story with this July meeting in London? Well, Biogen will undoubtedly be at the meeting, what Lashmet is presumably referring to is the Alzheimer’s Association International Conference (AAIC) taking place from July 16-20 in London. Biogen has not formally announced that they will be releasing any new data on their clinical trials at this conference, and the Phase 3 trials for aducanumab are far from complete (they are still enrolling now, and their final data collection date for their primary outcome measure is 2019 and 2020), but it’s quite likely that updates will be released with some regularity as they begin to get a meaningful number of patients into the trials.
The last presentation I reviewed from Biogen, their first quarter presentation here, indicated that the aducanumab trials should be 50% enrolled by mid-May, so presumably we’re at least past that point. The company has not publicly said whether or when they’ll release any results, from what I’ve seen, but it’s a 76-week trial (roughly a year and a half, for the math challenged), and the first patient was enrolled back in September of 2015, with essentially all sites still enrolling new patients. They think they’ll be fully enrolled a year from now, according to management comments in the transcript of their last call, so I would guess that more patience will be required and we won’t get any big news from Biogen at the AAIC meeting next month… but I could be wrong, and I’m sure Lashmet is much more informed than I am on this drug’s progress.
Lashmet’s argument, made further down in the ad, is that they are going to have a critical mass of people who have been taking the drug for at least a year soon, maybe even past 1,000 patients with some long-term data already, and he hasn’t heard any bad news… which he thinks means there might be good news that would force them to present the data and, if the drug works, perhaps stop treating patients with the placebo and giving them the drug if they want it, bringing an early end to the trial because it’s so successful.
And he says the earliest date when there might be successful results shared is this July conference, though he also allows that it might take months longer or roll into 2018.
Whether or not they provide any update on the enrollment or initial progress of these first patients, or have some blowout early success that really shakes things up, the second quarter report (also in July) should be significant for investors because the company is going through a management transition, has made some more acquisitions, and is going to update on their progress at refining or refocusing their strategy.
The positive thing, I think, is that expectations are probably pretty low for aducanumab among investment analysts — everyone hopes it will do well and become a blockbuster, but analysts are probably really keeping their expectations in check just because every other monoclonal antibody that tries to remove amyloid plaque has failed, often in Phase 3 trials… and the Phase 1b trial that got everyone so excited last year was really different from a Phase 3 trial (they got exciting efficacy results as the plaque was removed in an impressively dose-dependent fashion, but also had a very small sample and were looking more for safety than for efficacy). Phase 3 trials in the past have been where Alzheimer’s Disease drugs go to die… which doesn’t mean this one will fail, but it means we should put pretty long odds on success and be cautious that it’s very early yet.
Beyond that, I don’t have any specific insight into either their multiple sclerosis drugs, which dominate the market, or on the chances for aducanumab or their other compounds in the pipeline, but the Morningstar analyst who follows this one, for example, puts the fair value at about $338 and expects 11% ongoing annual earnings growth, with the wide moat of their multiple sclerosis drugs, though some of that expected earnings comes from their Alzheimer’s drugs — she models $3 billion as the “probability weighted” revenue for those drugs by 2025, which implies actual sales, if they are approved, of more than $15 billion a year (which probably means, if you read between the lines, that she’s modeling in roughly a 20% chance that one of their Alzheimer’s Disease drugs gets approved and becomes a big seller within eight years).
Biogen is not likely to be a violent growth stock, not unless shockingly great Alzheimer’s news sends them rocketing higher and the drug is approved quickly, but it is profitable and reasonably valued based on the current business, with a forward PE of about 13 that doesn’t assume any Alzheimer’s revenue (which would be at least a couple years away even in a great scenario), and that valuation seems more than fair if they can grow at even a pretty slow pace — the same is true of lots of mature biotechs, though, like Gilead (GILD), and a reasonable current valuation is of little solace when growth-hungry investors see declining future revenue and risks in future drug development and sell the stock.
So I don’t know what’s going to happen in the future, but Biogen Idec is a strong and profitable company today, and there is certainly the potential for Alzheimer’s Disease profits to come their way in the future if their drug continues to be successful in clinical trials (though we should always keep some skepticism, honoring the fact that more than 99% of Alzheimer’s Disease drugs have failed in clinical trials so far). If you’ve got a take on aducanumab or their other drugs, or a bet on their future stock price, let us know with a comment below.
Lashmet has talked up Alzheimer’s before — last time out, I determined that he was pitching Biogen’s partner Eisai, so you can see our take on that pitch from last Summer here if you’re curious.
And, as always, if you’ve ever tried Stansberry’s Investment Advisory please let your fellow investors know what you think of it by clicking here to share your opinion (and if you’ve tried Lashmet’s pricier offering, Stansberry Venture, feel free to review that as well). Thanks!