AC Immune - Light At The End Of The Tunnel?

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About: AC Immune SA (ACIU)
by: Mehdi Mehdiyev
Summary

Alzheimer's disease is the devastating threat of modern era.

Unbreakable wall for biggest players.

The light in the end of the tunnel?

Is it a train or the Sun?

Alzheimer's Disease

Alzheimer's disease is a devastating neuro-degenerative disease, one of the common forms of dementia. About 80 percent of dementia cases are caused by Alzheimer’s disease.

Named after the German psychiatrist Alois Alzheimer, the disease is currently diagnosed in more than 50 million people in the world and, according to scientists, this figure could tripled in the next 30 years.

Most often, Alzheimer's disease develops after 60-65 years, although the number of diagnosed cases in earlier age periods are increasing (so called early-onset Alzheimer’s). According to American Alzheimer’s Association around 200,000 Americans under the age of 65 have early-onset Alzheimer’s.

According to National Institute of Aging, approximately 5.5 million Americans may have dementia caused by Alzheimer’s disease (AD).

AD is progressive disease and it slowly destroys memory, cognitive functions and debilitating thinking skills. The causes of Alzheimer's disease have not yet been established, just as an effective drug has not been created to treat this disease.

Symptomatic therapy in Alzheimer's disease can alleviate the manifestations, but it is impossible to stop the progression of an incurable disease.

A lot of trials and even post-hoc analysis shows the outcome of AD in the brain: amyloid plagues, tau-tangles and loss of connections between neurons.

Healthy / AD Brains: image source: Mayo Clinic Radio: Alzheimer’s Research Update Healthy (left image) / AD Brain(right image): image source: Mayo Clinic Alzheimer’s Research Update

Besides of this degenerative process, general shrinkage in the hippocampus and entorhinal cortex were observed with neuro cells damage and death broadly in the brain.

But all these are outcomes of the disease, scientists are still are researching the origin and causes of AD.

Here is some informative video by National Institute on Aging (NIA) regarding AD:

How Alzheimer's Changes the Brain (VIDEO)

As we see the multiple processes involved in progression of AD, and researches on possible treatment require complex approach.

So that is the reason for me being skeptic on one-protein targeting approach, like just Abeta anti-Abeta antibody or tau-targeting itself.

Sorry for taking your time with all these details, but I think this is a key point to evaluate the possibilities and importantly to lower our expectations when we have to deal with AD.

I’d like to see the real opportunity to completely overcome this devastating disease in a short time, but the reality is - there is a long distance to the point, where we can have a pill to defeat AD. While currently we can expect some very positive results from ongoing researches and trials which can seriously slow down the disease progression and improve the quality of life of the millions of patients.

Recent disappointments

There have been a lot of “breakthrough” approaches in the past regarding AD treatment, but all have failed in the face of it’s unbreakable walls.

The one of the latest “disappointments” was Biogen (Nasdaq: BIIB) and it’s partner Eisai (Nasdaq: OTCPK:ESALY) decided to discontinue the development of aducanumab - monoclonal antibody targeting beta amyloid (for the details please click here).

It was costly decision, but if we add Roche dropping AC Immune’s crenezumab, which was also targeting beta amyloid, the total cost for just these 2 cases is hundreds of million of the shareholders money. But scientifically it was a step forward. At least it was understood that anti abeta-amyloid targeting itself is not enough. But as it is done always after trial is dropped, decision makers do not give the same pathway a second chance. I will come to this issue later.

From other hand we still remember another approach - targeting tau. And the most promising candidate in this area was Noscira’s GSK-3β inhibitor – Tideglusib.

It was showing promising results in Phase-2, but did not met primary endpoints at the end. Actually, it did not have classical tau-targeting approach, it was designed to reduce tau phosphorylation through GSK-3β inhibition. But that approach could also give some clues about potential of tau targeting.

I would like to focus now on the company which properly engaged in Alzheimer’s disease and have multiple approaches in their research.

AC IMMUNE

Why I took AC Immune (Nasdaq: ACIU) to discuss? Because from my point of view this is the only company possessing such a diversified multiple approach directed to treat AD.

Let’s have a look at their pipeline:

AC Immune development pipeline / image source: company

Company has robust pipeline consisting of potential drug candidates to treat Alzheimer’s and Parkinson’s diseases.

Multiple approaches: targeting beta-Amyloid (Cremezumab), Anti-Tau antibody, Anty-TDP-43 antibody, Morphomer tau program, anti-abeta vaccine (SupraAntigen platform).

It is really robust pipeline. Company achieved to gather all possible approached under the same umbrella. But there is a great lapse, from my point of view, they do not have at least one combinative approach.

Both anti-abeta and anti-tau have shown some signs of activity but not strong enough to continue Phase-3 trials in the past. I am sure that AC Immune is doing a great job in research, but having two major approaches on hands, they have to combine them in at least one trial.

I really hope that their anti-tau approach will bring some positive results (direct tau targeting has more probability to improve cognitive functions in AD) but it could show stronger results in combination.

As for me, combination of ACI-24 (anti-Abeta vaccine) and ACI-35 (anti-Tau vaccine) could be a promising trial which could have more positive outcome in early staged of AD. Such multi-targeting approach in theory can at least slow down the disease progression.

Some Figures

As of December 2018 company had CHF156 million cash & equivalents.

Company Company

Annual cash burn in 2018 was around CHF44.00 millions, which is pretty good in terms of the fact, that company has several strategic collaborations with tiered milestone payments from global companies like: Janssen, Eli Lilly and Genentech.

The collaboration agreement regarding anti-Tau monoclonal antibody program with Genentech is still in force (while Crenezumab’s agreement terminated). Due to this agreement AC Immune can receive up to CHF400.00 million development and commercial milestones + royalties.

Another collaboration agreement regarding AC-35 (anti-tau vaccine) is with Janssen Pharmaceuticals. Company is eligible to receive up to CHF500.00 million development and commercial milestones + royalties due to this agreement.

In December 2018 AC Immune has entered into collaboration agreement with Eli Lilly, which provides the company the possibility to receive payments totaling up to approximately CHF 1.8 billion for the development of it’s Tau Morphomer small molecules for the treatment of AD. CHF50.00 million upfront payment due to this agreement probably will be reflected in the 1st quarter report of 2019.

The company has strong collaborations which can bring more than CHF2.7 billion just milestones, excluding royalties.

Another positive point is that due to the collaboration agreements the majority of clinical trials’ costs are shared between partnered companies and AC Immune (NASDAQ:ACIU).

Conclusion

AC Immune is promising clinical stage company which has robust pipeline with diversified approaches to achieve potential treatment for AD and PD.

AC Immune has strong collaboration & commercialization partners which is very positive for clinical stage company.

But due to major activity of the company is Alzheimer's disease it bear high risks. Current price is very attractive to enter but if the issue is Alzheimer's disease I personally will patiently wait till 2H2019 for the clinical data confirming anti AD activity before opening any buy position. It will be the sign that there is a light in the end of the tunnel and it is not a train.

Disclosure: I/we 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.