BioArctic: Validation of the amyloid-beta hypothesis

Eli Lilly reported results from the phase II study of donanemab, a humanised monoclonal antibody targeting a form of amyloid-beta called N3pG, found in plaque in the brain. The results confirmed that donanemab cleared the plaque to normal levels and slowed cognitive decline.

The study design

The study was randomised, placebo-controlled double-blind, with 272 early-stage symptomatic Alzheimer’s disease patients with evidence of amyloid plaques that showed memory loss, but were still at an early enough stage to be able to benefit from the treatment. The study is called TRAILBLAZER-ALZ  and began in 2017, designed to test safety, tolerability and efficacy.

Donanemab met the primary endpoint of change from baseline to 76 weeks in the Integrated Alzheimer’s Disease Rating Scale (iADRS), slowing a statistically significant decline by 32% relative to placebo. The iADRS is developed by Eli Lilly as a clinical composite tool and combines the cognitive measure ADAS-Cog13 and functional measure ADCS-iADL, two commonly used measures in Alzheimer’s disease. Also, by targeting N3pG Aβ, the donanemab treatment resulted in high levels of amyloid plaque clearance, as measured by amyloid imaging. The patients showed plaque reduction to a healthy level and were switched to placebo. Another proof-of-mechanism is the low incidence of ARIA-E, amyloid-related imaging abnormalities – edema, which occurred in 27% of the treated arm, and only 6% experienced symptomatic ARIA-E.

In November, Eli Lilly continued with an OLE (open-label extension study)  of 100 participants. In October, the company began recruiting patients for a second phase 2 safety and efficacy study (TRAILBLAZER-ALZ2) in 500 patients. The study is similar to TRAILBLAZER-ALZ, but the endpoint is measured differently, through the CDR-Sum of Boxes after 18 months.

Eli Lilly refers to the second study as a “pivotal”, indicating that there will not be a phase III study. Previously, the company failed in several phase III studies with another candidate, solanezumab, which targeted primarily monomers. The study did not show a statistically significant slowdown in disease progression.

The amyloid-beta hypothesis

The amyloid-beta hypothesis states that toxic forms of the accumulated protein in the brain contributes to Alzheimer’s disease and therefore eliminating these toxic forms (oligomers, protofibrils) should slow down disease progression. There is a tendency in the perceptions of the market to “bundle” antibodies that were developed with view of this mechanism of action, but have very different design and targeting profiles.

According to the amyloid-beta cascade hypothesis, antibodies targeting mostly monomers which are not seen as toxic and could play an important role in preserving nerve cells, would not be effective in slowing down AD. Such was the case with solanezumab. Another antibody, aducanumab, with inconclusive clinical data, was not recommended for approval by the FDA advisory committee last November and would probably be rejected by the FDA in the first week of March this year. It was derived from human antibodies and had a stronger affinity to fibrils than to the oligomers and protofibrils. Incidence of ARIA-E was relatively high, 35%, and 30% of them had symptoms.

Donanemab and BAN2401 or lecanemab (developed by BioArctic and licensed out to Eisai) are designed and developed in a very similar way: both derived from mice. humanised monoclonal antibodies, with slightly different targeting profiles. While donanemab targets primarily fibrils and plaques, BAN2401 targets oligomers and protofibrils, the toxic forms of amyloid-beta. Both have shown a low incidence of ARIA-E and consistent results in slowing down cognitive decline. BioArctic’s compound had 1% ARIA-E.

Therefore, the results from the donanemab study further validate the amyloid-beta hypothesis that. The candidate has a slightly different targeting profile than lecanemab, but it was developed on the same principle – with focus on the toxic forms of the amyloid-beta protein.

BioArctic’s valuation

We are maintaining our view that the stock is undervalued and there is a 50% upside from current price levels. We calculate with a base case for BioArctic of SEK 150 per share and as we have argued previously that the company has stellar research and development capabilities, a strong portfolio consisting of drug candidates with various mechanisms of action, diagnostic tools, and a drug delivery (blood-brain-barrier) technology. The company has around SEK 1bn in cash.
However, most of the value derives from one main asset, the out-licensed BAN2401 in phase III. The company has also another candidate in clinical development (phase I), ABBV-0805, out-licensed to AbbVie.

Triggers for the stock in 2021:

March 7 FDA decision on aducanumab

Presentations of clinical studies and results for both BAN2401 and donanemab at these conferences:

AD/PD March 9-12;

AAIC conference 26-30 July;

CTAD conference 9-12 November;

Eisai would complete phase III study Clarity AD in 2022, but we will receive some indications about it already in 2021. Depending on how these turn out, we believe that as 2021 draws to a close, the suspension around BAN2401 could drive the price up. Investors could take a position in the stock by mid this year in order to take advantage of that.

At 10:00 today we will be commenting on donanemab and BioArctic in Healthcare Direkt. Tune in.