Biotech Buzz Post No. 15 - ADHD

Israel's Alcobra Pharma (Nasdaq: ADHD) has great Phase IIb data in ADHD with MG01CI, a non-stimulant drug.                                                                                                                     

Alcobra Pharma (Nasdaq: ADHD) – Another fast-mover from the Startup Nation

“Time is what prevents everything from happening at once” – John Archibald Wheeler (1911-2008), US physicist.


Nothing is certain in this world and, I assure you, everything is far from certain in the game of drug development, but I’ll tell you one of the things I am almost certain about: Come up with a better drug to treat ADHD than what’s out there at the moment, and you’ve got a billion dollar molecule on your hands. It’s estimated that between 5% and 12% of kids in your typical industrial country have Attention Deficit Hyperactivity Disorder, and that around half of them won’t grow out of it. I don’t care if you think ADHD isn’t real (it’s only really been an ‘official’ disorder since ‘Attention Deficit Disorder’ made it into DSM-III, the 3rd Edition of the American Psychiatric Association's Diagnostic and Statistical Manual of Mental Disorders, in 1980) and that it’s one of those made-up disorders like Female Sexual Dysfunction that drug companies latch on to every now and then. Meet a kid with ADHD and you’ll know he’s a nightmare to parent or to teach, and when he grows up he’ll potentially be difficult to live and work with. Behavioural therapy to set the kid straight is expensive. That leaves drugs. The need for better drugs to treat the vast numbers of inattentive and hyperactive kids out there is the reason why Vyvanse did US$1.03bn in 2012 net sales for Shire and one of the reasons why Randal Kirk, who sold New River Pharmaceutical to Shire for $2.6bn in 2007 so they could get the drug just after it had gained FDA approval, is now the world’s 613th richest person.

The thing about the ADHD drug scene is that the products may sell in the billions but they have noticeable shortcomings. Let’s start with the one everyone knows about, Ritalin, from Novartis. It’s a short-acting version of methylphenidate, an amphetamine derivative that the Novartis precursor Ciba-Geigy first synthesised in the 1940s and started marketing in the 1950s for things like depression and narcolepsy. The reason certain kinds of amphetamines are drugs of abuse that the DEA has been going after since the mid-1960s is because they’re stimulants – you get a high from all that dopamine they help pump into your brain, and that can be addictive in a bad way. Don’t get me wrong. Dopamine is actually good for you – the reason people have ADHD in the first place is that dopamine helps you pay attention and Ritalin works by bringing it back to normal levels. But that leaves the potential for Ritalin to be abused by people looking for the high, and you’ve probably heard stories by now of playground drug dealers whose main product is Ritalin (click here for a good one).

Now, there have seen improvements in the kinds of drugs that doctors prescribe, but not much. J&J’s Concerta (FDA approved in 2000), is simply long-acting methylphenidate, but that’s good for a US$1.07bn in 2012 net sales. Focalin (FDA approved in 2001) is d,l-methylphenidate, the active isomer of methylphenidate, and that helped keep Novartis’s ADHD franchise at US$554m in 2012 net sales. The abovementioned Vyvanse, real name lisdexamfetamine dimesylate, is a prodrug of d-amphetamine that allows for longer therapeutic action. The problem with all these drugs is that they’re still stimulants – like amphetamines they can mess with your head, interfere with sleep and appetite, and increase your blood pressure, among other things. Moreover, they don’t work for everybody – possibly 30% to 50% of those who are prescribed stimulants either don’t respond or can’t tolerate the drug, meaning that only around a fifth of patients come back for more next month. That’s why, when Eli Lilly gained FDA approval for Strattera in 2003, people got excited. Here was the world’s first non-stimulant ADHD drug, it being a selective norepinephrine reuptake inhibitor. Trouble is, that drug takes up to 10 weeks to start working, and patients complain about things like fatigue and sexual problems when they’re on it. But it’s still a non-stimulant, which is why Lilly made US$621m in net sales out of it in 2012.

Which brings us to an Israeli company recently listed on Nasdaq which may be in a position to make some more progress in this somewhat troubled if lucrative drug market. Two years ago Alcobra Pharma (Nasdaq: ADHD), from Tel Aviv, completed Phase IIb with a drug candidate called MG01CI and showed that it had the makings of a great new ADHD therapy. If you’ve read Dan Senor and Saul Singer’s Startup Nation (and if you’re like me, a Gentile with a high regard for the character and achievements of Israel’s 7.7 million people, I highly recommend the book) it won’t surprise you to learn that Alcobra didn’t come up with MG01CI from scratch. Israelis are good at drug discovery – just look at Teva’s Copaxone – but they can be an impatient lot, so they’re even better at reprofiling existing drugs where they can get to market faster. MG01CI started life as metadoxine, an alcohol detox drug used clinically in Europe since the 1980s. Alcobra, which only started up in 2008, took intellectual property over the drug's use in ADHD and created a combined rapid onset/extended release formulation before going to the clinic.

MG01CI’s Phase IIb study was a six-week affair in 120 adults with ADHD randomising 1:1 either to 1,400mg of MG01CI or placebo. The drug was found to be well-tolerated, with nausea being about the only thing bothering perhaps a fifth of treated patients, and even with that factor 95% of treated subjects still completed the six weeks of treatment. However the thing that will have impressed people when they read the results in the Journal of Clinical Psychiatry (click here) is its effectiveness. Measured using CAARS (the Conners’ Adult ADHD Rating Scales) and TOVA (Test of Variables of Attention), MG01CI was beating placebo with statistical significance after as little as two weeks of treatment. This will have been considered a big deal in psychiatric circles because MG01CI isn’t a stimulant and it’s not dopaminergic. It works through a serotonin receptor called 5-HT2b. Science has had clues for a long time that abnormal levels of serotonin had something to do with ADHD (click here). The field now has a validated target that allows ADHD to be treated using the serotonin system, with the prospects for a whole lot of safer drugs in the future than what we have now.

The beautiful part of the Alcobra story is the speed with which MG01CI can now move forward because of the short dosing window before they get data readout. The company expects to have interim Phase III data by the middle of next year and be completing both its pivotals by the end of that year. This puts Alcobra on track to have FDA approval for MG01CI sometime in 2015. And there may be more for MG01CI beyond ADHD. Earlier this month Alcobra announced that it had done a mouse study of its drug in Fragile X Syndrome and found ‘significant improvement in cognitive and social functioning’. So there could be an Orphan designation in MG01CI’s future. But leave that news aside and ask yourself this: Given what Vyvanse has achieved for Shire and Strattera for Lilly, how much would you expect to pay for MG01CI going into Phase III? Alcobra did its IPO and listed on Nasdaq in May, raising US$25m, at US$8 per share. The stock is now US$15.68 but that only capitalises Alcobra at US$175m.

There’s an interesting Australian angle to this ADHD story that I think is worth paying attention to. Here in Sydney my friend Dan Segal, formerly a great equities analyst covering the telco sector, has spent the last 13 years building Brain Resource (ASX: BRC, OTCQX: BRRZY), owner of the world’s largest database of brain function. Dan’s company now has a treatment prediction engine that can be used to pick the right ADHD drug for each patient, potentially cutting out the sort of hit-and-miss on prescriptions that I alluded to above. A similar engine does the same thing for anti-depressants, and Brain Resource is now workshopping with the FDA on the appropriate approval path for this system. In each case there are millions of scripts that can be written a whole lot more efficiently once the engine is in widespread clinical use. If you think Alcobra is tiny compared to its potential you should see Brain Resource. At the moment you can get it down here for A$41m.

Stuart Roberts, Australian Life Sciences consultant, with global focus
Nisi Dominus Frustra

+61 (0)447 247 909

sroberts2164@gmail.com

Twitter @Biotech_buzz

About Stuart Roberts. I started as an equities analyst at the Sydney-based Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group (ASX: BFG) in 2008 and I continued at Bell Potter Securities until June 2013. Over the twelve years to 2013 I built a reputation as one of Australia's leading biotech analysts. I am currently consulting to the Australian biotech industry. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Previous Australian Biotechnology Buzz posts:
Advanced Cell Technology (OTCBB: ACTC), 4 September 2013
Alcobra Pharma (Nasdaq: ADHD), 17 September 2013
Aradigm (OTCBB: ARDM), 8 September 2013
Cellular Dyamics (Nasdaq: ICEL), 3 September 2013
ImmunoCellular Therapeutics (NYSE MKT: IMUC), 27 August 2013
Immunomedics (Nasdaq: IMMU), 21 August 2013
Inovio Pharmaceuticals (NYSE MKT: INO), 24 August 2013
Merrimack Pharmcaceuticals (Nasdaq: MACK), 26 August 2013
Oncolytics Biotech (Nasdaq: ONCY),  22 August 2013
Pharmacyclics (Nasdaq: PCYC), 2 September 2013
Regulus Therapeutics (Nasdaq: RGLS), 23 August 2013
Sunshine Heart (Nasdaq: SSH), 28 August 2013
Synta Pharmaceuticals (Nasdaq: SNTA), 1 September 2013
TrovaGene (Nasdaq: TROV), 15 September 2013
Verastem (Nasdaq: VSTM), 5 September 2013

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.