Biotechs Treating Incurable Disease Warrant Early Look

by: Troy Bayer

In the final quarter of 2012, several biotech companies plan to announce the results of groundbreaking clinical trials for previously incurable diseases such as Parkinson's disease psychosis (PDP), Secondary Progressive Multiple Sclerosis (MS), and ulcerative colitis. These progressions follow Neuralstem, Inc.'s (NYSEMKT:CUR) completion of Phase I amyotrophic lateral sclerosis (ALS or Lou Gehrig's disease) stem cell trial in August 2012. Below is a status update on several clinical trials for readers to gauge whether any of the companies provide investment potential.

Last week, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) completed a critical Phase III clinical trial using the drug pimavanserin for patients diagnosed with PDP. Pimavanserin is given to patients in the form of a daily tablet and taken orally. Results of the Phase III trial are expected by the end of November and will report on the efficacy, tolerability, and safety of the drug. Parkinson's is a neurological disease that affects nearly 1 million people in the United States, with estimated healthcare costs exceeding $25 billion.

At the end of August, Neuralstem Inc. completed its Phase I clinical trial using neural stem cells to treat ALS. While the intention of the trial was strictly to validate the safety of injecting stem cells into the lumbar and cervical regions of the spine, the procedure yielded surprising efficacy results in spite of utilizing only one-third of the target volume of stem cells. Dr. Eva Feldman, the Director of Research of the ALS Clinic at the University of Michigan, surprisingly pronounced that the disease appeared to stop progressing in some trial patients. The miraculous improvement of ALS patient Ted Harada after receiving the intraspinal injection has also been well documented in the national media.

Healthcare costs associated with ALS treatment are estimated to be approximately $3 billion. Like PDP and MS, there is currently no cure for ALS. However, there are treatments available to provide temporary symptom relief. With regards to ALS, Sanofi-Aventis (NYSE:SNY) offers the only FDA-approved treatment; a drug called Rilutek. Unfortunately, the only demonstrable benefit of taking Rilutek appears to be a 2 to 3 month temporary extension before invasive breathing assistance is required.

Opexa Therapeutics, Inc. (NASDAQ:OPXA) plans to initiate a phase IIb clinical trial in December 2012 for the T-cell immunotherapy treatment named Tcelna. The trial will evaluate the drug's efficacy, safety, and tolerability when utilized for treating Secondary Progressive MS. The company is also proceeding to a pivotal Phase III trial for treatment of Relapsing Remitting MS (RR-MS). MS is a debilitating disease in which the body's immune system eats away at the nerve system's protective cover, resulting in deterioration of nerves. The disease affects approximately 350,000 people in the U.S. and has an enormous lifetime cost of $2.2 million per patient.

In early 2013, Athersys, Inc. (NASDAQ:ATHX) plans to release initial results of a collaborative study with Pfizer (NYSE:PFE) to treat ulcerative colitis using MultiStem, its flagship product derived from stem cells. Ulcerative colitis affects more than 2.3 million people in the United States, with average healthcare costs estimated to be $1.7 billion. There is also no cure for ulcerative colitis. Current treatments, including surgery in some cases, are not always effective and may only provide temporary relief for symptoms.

The progress these companies are demonstrating in finding safe solutions to previously incurable diseases is impressive. Biotech companies at the clinical stage certainly present moderate risk as they do not have a commercialized product pipeline. However, it is certainly worth monitoring the status of these clinical trials over the next three to six months as products move closer to commercialization.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: The writer is not a licensed broker or investment adviser and therefore cannot recommend that you buy, sell, or hold any security. While every attempt was made to verify the information in this report, much has been derived from public sources and cannot be guaranteed for accuracy.

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