|ILNS has multiple stakes in $20 billion Alzheimer's space race|
|Tuesday, 13 July 2010 13:12|
In the pharmaceutical industry, a "blockbuster drug" is one that achieves acceptance by prescribing physicians as a therapeutic standard for a prevalent condition or disease.Those drugs that bring in billions of dollars, such as Lipitor, which is marketed by Pfizer (NYSE: PFE) for high cholesterol, Nexium by AstraZeneca (NYSE: AZN) for hyperacidity, and Zoloft (also marketed by Pfizer) for depression, have turned Big Pharma into one of the globe's most profitable industries. It goes without saying that drug makers spend hundreds of billions of dollars on research, development and sales efforts to push these blockbusters into medicine cabinet shelves.
If a blockbuster, then, is defined as a drug that brings in at least $1 billion in sales, how should we refer to a drug that has the potential to help conquer a $20+ billion market- the same market that is expected to double in the next thirty years? The term "mega-blockbuster" seems almost too small.
In America alone, 5.3 million people have Alzheimer’s and those numbers are just part of what is at stake as investors look at the Alzheimer's disease space.
"Right now, there is a race by some of the biggest pharmaceutical companies to get that first FDA approved 'cure' for Alzheimer's across the finish line," says a leading expert in the field who is very familiar with drug development at one of those companies, but who spoke only on condition of anonymity due to his employer's strict policies. "What's interesting here is that in order to get that FDA approval, you have to simply prove that your drug is more effective than the previous drug. Right now, we have no real answer for Alzheimer's, so getting there first is extremely important and whoever crosses that finish line first stands to make billions. Perhaps even more than anyone has ever made right out of the gate before."
Thus far, the U.S. Food and Drug Administration has approved only two types of medications for Alzheimer's and both only seek to treat the cognitive symptoms of the disease, not the disease itself. Sadly, family members of those suffering from the illness often chose to spend the money on those treatments even though socialized medicine entities around the globe have started refusing to cover or pay the exorbitant prices for those counteractant prescriptions.
Pfizer, who already markets two of the top four blockbuster drugs around the world, now stands to capture a majority of the billions waiting on the other side of that finish line. Their focus in attacking the illness focuses on reducing brain levels of beta amyloid, a protein that accumulates in the brains of those with AD, thus initiating a cascade of events that leads to brain cell damage and death.
Even though lab data consistently showed that Pfizer's highly selective anti-amyloid monoclonal antibody (PF-04360365) showed promise in potentially changing the course of Alzheimer's; a year ago, the pharmaceutical giant found themselves running a distant second in the race.
A decision was made to gobble up Wyeth, who had jumped ahead of them after partnering with Elan (NYSE: ELN) on the development a drug called Bapineuzumab. Since then, Bapineuzumab- which also takes the anti-amyloid approach- has moved on to some of the largest, most expensive Phase III trials (see chart) in history despite very vocal critics who feel that the companies are pressing forward based on "wishful thinking and shoddy statistical analysis." Others, just as vocal, feel that Bapineuzumab will go on to prove itself those trials. It must be noted that those same trials have now been re-designed to show better efficacy.
Interstingly, If this were a game of poker, the "tell" might have come in the form of an investment by Johnson and Johnson (NYSE: JNJ).
J&J was one of several companies that had announced setbacks with experimental treatments for the disease, but in hopes of still being able get a piece of the pie and lured by something they spotted in the Phase II results, they approached Wyeth and Dublin-based Elan with a near $1 billion dollar offer to pay for Phase III trials and join them in the race.
Maybe we're wrong, but it seems to us that no one spends $1 billion dollars these days without feeling pretty certain that they're going to get a drug across the finish line one way or another. It also seems logical to place our bet on the same side of the table given that the researchers and scientists at all four of those companies are all getting behind the same Alzheimer’s drug discovery strategy.
Michael Gold, vice president of neurology at GlaxoSmithKline told Bloomberg: “Everyone is waiting with bated breath on Bapineuzumab. If that one fails, then everyone will say we have to rethink the amyloid hypothesis.”
What very few have known until now is that the science and platform which all those companies, including Glaxo, are betting billions on come from the same laboratory.
Intellect Neurosciences (OTC:ILNS), a small, publicly traded micro-cap company which was, until just recently, in debt and struggling to simply survive, is in line for their own piece of the profits.
"We believe that we have an approach that has the high potential to succeed because it targets a very primary point in Alzheimer's disease," said Dr. Daniel G. Chain Ph.D., Chairman and Chief Executive Officer of ILNS. "We also believe that drugs which have the potential to slow down or arrest Alzheimer's disease are on the horizon now. We're much closer than we have been, previously. We are hopeful that Bapineuzumab and other drugs that are being developed to target Beta-amyloid and promote its clearance will be effective in treating the disease."
Chain’s father, Professor Sir Ernst Chain, Ph.D. discovered how penicillin could be used as a dramatically effective, life-saving antibiotic. For his work, the elder Chain shared the Nobel Prize with the better-known Dr. Alexander Fleming and Chain’s head of department, Howard Florey in the 1940s.
New investors in the company are hoping that the younger Chain will become known throughout the world as the scientist who discovered what may prove to be not just a treatment for the symptoms – but a way to stop or even prevent – Alzheimer’s disease.
“I’ll never forget it – the date was November 10, 1996,” Chain explains. “I woke up on this unsuspecting Sunday morning with an idea for a potential therapy for Alzheimer’s Disease. It just crystallized in my mind on that morning - a way to prevent the accumulation of the toxin that floats in brain fluid.”
“My idea was to attack the problem at its root, aiming to stop the accumulation of the Amyloid Beta protein which accumulates in the brains of Alzheimer’s patients. My insight – it’s technical – involves creating a monoclonal antibody to clear away the Beta Amyloid protein which accumulates in the brains of Alzheimer’s patients. I realized that antibodies targeting Beta Amyloid have this potential. The idea was to use a specific class of antibodies that would tag onto the ends of Beta Amyloid to help mobilize and clear it away from sites of damage in the brain. I called these antibodies 'ANTISENILINS' because they could be potentially used to prevent senility in Alzheimer’ disease and because the name rhymes with Penicillin – a tribute to my late father."
This story has never been told without gag orders and carefully muzzled words bound by non-disclosure agreements. In fact, after attempting to connect the dots for ourselves, it would seem that some of those same Big Pharmas may have even insisted on repressing the Intellect Neurosciences story. We know the reason why one of them is trying to obsfucate the truth, but can't prove it so our lawyers asked us not to disclose it in a public forum shuch as this [although I would certainly be willing to respond to friendly e-mails about it].
ILNS has a story that we're going to continue to explore and tell our readers going forward. We have been facsinated by the science and demeanor of Dr. Chain since meeting him in New York City in September of 2009. But watching his presentations to investors can be somewhat painful given the obvious limitations which have been set in place by some of those sizable license agreements, which are scheduled to pay Intellect a mid single digit royaly (5%?) upon reaching certain milestones in the development and patent process.
"The company today has a very special value proposition," says Chain. "We have royalty bearing licenses. Some of the details are confidential but someone could potentially connect their own dots by looking closely through our filings with the SEC."
According to one analyst, pure math leads him to deduce that shares are discounted significantly based solely on the $1 billion dollar stake Johnson and Johnson paid for their slice of the action.
As the company eliminated and converted their debt, they issued millions of new shares, but watching the stock trade the last few sessions confirms what we have been told: a vast majority of the shares are still held by insiders who- as part of that debt reduction- are subject to a one year lockup that expires on April 23, 2011 and prevents them from selling their shares.
Other nice developments we are hearing on the horizon are purely rumors now, but if they play out as anticipated, will continue to add credibility and market cap to this speculative high-reward penny play. Stay tuned.
Disclosure: Long ILNS