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Neurodegenerative diseases such as Parkinson's or Alzheimer's have long been regarded as untreatable save a few symptom-slowing medications. The reason is very basic. Nobody has figured out how to keep nerve cells from dying yet, and once they die, they never come back. However, recent breakthroughs may signal some light at the end of the tunnel. One in particular, the advent of manufactured neurotrophic factors, may be a key to mediating the programmed cell death that triggers these diseases, a process known as apoptosis.
What are Neurotrophic Factors?
To answer this question, it is first important to establish what neurotrophins are. Neurotrophins are groups of growth factors - proteins produced naturally in the brain that promote the growth and survival of neurons, the "building block" cells that process and transmit electrical information in the human nervous system. As the nervous system develops, nerve target cells secrete neurotrophins, and those neurons that receive enough neurotrophins will survive while those that don't will not. The process through which the neurotrophins bind to the neurons is complicated, and the exact mechanisms of it need not interest investors as to their particulars. What is important to understand though is that through the binding process, a signal is created that serves to inhibit the genes responsible for apoptosis. With apoptosis inhibited, the nerve cell stays alive.
Neurotrophins are also known to help regenerate and repair other cells in the body, not just nerve cells. They have been observed to increase in concentration after exercise in mice for the purpose of muscle regeneration, and they are also present in the retina, kidneys, and prostate.
Neurotrophic factors are another name for neurotrophins, though the term neurotrophic factor includes different classes of them not necessarily included in the other term. Ever since the mapping of the human genome, the genes for these proteins can be isolated in a DNA plasmid which can then be used to produce the protein at will. As of today, large batches of neurotrophic factors can be synthesized easily in a lab, meaning they can be applied anywhere simply by injecting them. The basic idea then is simple. If neurons or cells are dying somewhere, inject a neurotrophic factor there and prevent neurodegenerative disease progression.
As mentioned, a number of clinical trials are currently underway that are designed to test the efficacy of this approach. Many of them are sponsored by private companies, but any successes for any of them will positively affect the valuations of the companies that are investable, so any and all developments are important for this treatment approach in that it is a very small niche. We will begin with the closest high profile catalyst that will have, in my opinion, the most important impact on the neurotrophic factor approach to neurodegenerative disease.
Brainstorm (OTCQB:BCLI) and Amyotrophic Lateral Sclerosis
Better known as Lou Gehrig's disease, Amyotrophic Lateral Sclerosis (ALS) is a neurodegenerative disease that damages and eventually kills motor nerve cells in the central nervous system. Brainstorm Cell Therapeutics (OTCQB:BCLI), an Israeli company that trades over the counter in the US, has designed a treatment that differentiates bone marrow stem cells into highly specialized, neuron supporting cells. These cells secrete neurotrophic factors that serve to both protect and regenerate the nerve cells that ALS depletes. The treatment is currently in a phase 2a trial, as part of a collaboration with the Hadassah Medical Organization. Recruiting is complete, and the company expects the primary completion date to be February 2014, only one month from now.
Brainstorm is a bit of a special case because the investment community views the company more as part of the stem cell niche than as part of the neurotrophic factor niche, in that the company uses stem cells as a vehicle for introducing the neurotrophic factors into the central nervous system. Stem cells, for whatever reason, get much more attention from the press than neurotrophic factors. This may mean that positive results for Brainstorm's phase 2a will have little effect on the valuations of other companies in the NF niche, but paradoxically, that's what makes the results of this phase 2a even more important for the NF sector. If positive, it will have great ramifications for neurotrophic factors as an approach to treatment, but price will not be affected too much initially because most will not understand the implications immediately. This will give investors interested in the NF area a golden opportunity and time to research other NF companies in the event Brainstorm succeeds in its latest trial.
Phase 1 results were quite impressive with 6 of 12 ALS patients showing signs of clinical improvement, including ability to swallow, breathe, and muscular strength. Having just received an $800K grant from the Israeli government, the company now has about $1.1M in cash which should be enough for one more quarter when phase 2a results are due. After that, positive results will lead to a spike and probably an equity financing of some sort to continue into the upcoming 48 patient phase 2b. Also notable is that Brainstorm has zero debt to speak of, giving it much breathing room to exercise different financial options as it continues into the development stage.
Parkinson's Disease and Alzheimer's Disease
Along with ALS, neurotrophic factors are being tested on Parkinson's and Alzheimer's. While ALS damages motor neurons affecting movement, Parkinson's damages dopaminergic neurons in the brain and Alzheimer's attacks the brain generally. Sangamo Biosciences (SGMO) is the safest play pursuing a NF treatment for these diseases. In September 2013, Sangamo acquired the San Diego-based biotech Ceregene, a company that uses neurotrophic factors to combat both Parkinson's disease and Alzheimer's disease. Under the terms of the acquisition Sangamo now owns all the rights to Ceregene's lead neurotrophic candidates, CERE-110 for Alzheimer's disease treatment and CERE-120 for Parkinson's disease treatment. Both use an approach of attenuated virus delivery of neurotrophic factors into the brain. A virus is encoded to produce the protein and excrete it into the brain, but causes no disease.
In April 2013, Ceregene reported results from its phase 2B study, designed to test the efficacy of CERE-120 in the treatment of Parkinson's disease. The study failed to show any statistically significant results related to its primary endpoint, but did meet its secondary endpoint and demonstrated safety. The study is ongoing, with a final completion date also set for September 2014.
A second phase 2 study conducted by Ceregene is fully recruited and well underway. This study is designed to assess the efficacy of CERE-110 in the treatment of Alzheimer's disease. Despite CERE-110's failure to reach its primary endpoint previously, it could indeed end up having a different effect on Alzheimer's than Parkinson's because different brain cells are receptive to different neurotrophic factors. In August 2013, Sangamo reported that the test patients, half of whom were treated with CERE-110 and half with a placebo, "are in the follow-up stage of the study which will evaluate the effect of treatment on established clinical end-points in cognitive function and quality of life." The company expects the study to complete in December 2014, with results announced early 2015.
Sangamo is still bleeding cash, but it has lots of reserves. With over $126M in current assets, zero debt, and a quarterly burn rate of $5.5M last year, there is still plenty of time for results to come in.
Another company operating in this space is Amarantus Bioscience (OTCQB:AMBS). In 2003, a new class of neurotrophic factors was discovered called mesencephalic astrocyte-derived neurotrophic factor, or MANF. Amarantus acquired the rights to test and market this protein. The company is currently restructuring its pipeline to focus on MANF application to not just Parkinson's disease, but diabetes, traumatic brain injury and myocardial infarction. Most importantly, the company has received orphan status for retinitis pigmentosa, but clinical trials are yet to begin. While MANF is currently preclinical and will likely have little effect on the company in the near term, Amarantus shares could benefit from positive results from Brainstorm, or more likely, from positive results from a phase 2 trial on Neurotrophic Keratitis, (see below) another degenerative eye disease, with results available as early as next month. Amarantus also has an Alzheimer's diagnostic test called LymPro pending CLIA approval this year, which will be big for the company.
Amarantus currently has enough cash for about one more quarter and then it will have to refinance, so those interested should keep that in mind.
The benefit to either of these companies in successfully developing treatment for Parkinsons or Alzheimer's is huge. The number of Americans with Alzheimer's is expected to reach 20 million by 2050. In the same timeframe, the direct cost associated with Alzheimer's is expected to reach $1.2 trillion, up from $200 billion at present.
The figures read similar for Parkinson's disease, with an estimated 1.5 million sufferers in the US alone. Worldwide, analysts suggest this number could be 5 million. Average treatment cost translates these two figures to a market potential in excess of $1 billion in the US, and $5 billion worldwide.
As for private companies, the closest catalyst of note is targeting a disease called Neurotrophic Keratitis, a degenerative eye disease of the cornea. The Italian company Dompé s.p.a. is running this 174-patient phase 2 trial of an unnamed drug based upon a neurotrophic factor called rhNGF. The trial is ongoing, and still recruiting. Results are expected as early as February, with the trial's final completion date estimated to be May 2015. Results for this trial will be very important for the companies using neurotrophic factors to treat other eye diseases, especially Amarantus in its pursuit of a treatment for retinitis pigmentosa.
Another eye disease attracting the use of NF's is macular telangiectasia, which is present in .1% of the population. Researchers know very little about this disease or what causes it. It is a degenerative condition of an area in the retina called the macula, and one company is using a ciliary neurotrophic factor in an attempt to treat it. The study is being carried out by Neurotech Pharmaceuticals, a US based biotech company. It is an active trial, ongoing and with recruitment pending. The company expects to complete the trial in September. One eye should be kept on it as a bellwether for the neurotrophic factor approach, though it is less important at present than Dompé s.p.a.'s Keratitis treatment in terms of potential impact on the sector.
These are very early days for the companies operating in the neurotrophic factor space, and as such their market capitalization might represent only a fraction of their true value. Over the next couple of years, data releases associated with these diseases mentioned and their respective treatments could catalyze growth in the sector. Investors who buy in at this stage can expose themselves to the massive potential upside, assuming positive trial results. February and September will be big months for neurotrophic factors. Investors should keep their eyes on Brainstorm and Dompé s.p.a.in particular. Brainstorm because positive results could go unnoticed in the NF space, and Dompé s.p.a. because it is obscure and private, yet the implications of its large phase 2 trial for neurotrophic keratitis will be huge, especially for Amarantus, which is also pursuing a NF treatment for a degenerative eye disease.
Investing in the cutting edge of medical science is extremely risky, and investors should be aware of this. While neurotrophic growth factors have been around for a decade, only now have biotechnology companies reached the clinical trial stage. On countless occasions, theoretically sound medical breakthroughs fail to materialize when subject to FDA scrutiny.
Further risk lies in the doubtless future dilution of the smaller companies mentioned in this article. Both Brainstorm Cell Therapeutics and Amarantus Bioscience will require further financing before the clinical trials associated with their respective treatments are complete. This financing requirement will likely be met through stock issue that, in the short term at least, will dilute the value of early investors' holdings. On the other hand, dilution in the face of positive trial results will be immaterial to valuation.
All said, neurotrophic factors are an up and coming area of medical science that, in the coming years, could offer investors exposure to vast treatment markets including, but not limited to, that of Parkinson's and Alzheimer's disease. Other than through Sangamo, exposure options are limited at present to a handful of relatively small biotech's but if the trials produce positive results, bigger players might establish a position in the space. With two big results scheduled to be out by September, 2014 could prove to be a pivotal year for neurotrophic factors.