The Alzheimer’s Disease treatment market is known for its vast potential given the fact that there are hardly any active drugs and therapies that produce any real improvements in patients' conditions.
As per the data of Acumen research, the demand for Alzheimer's treatments is expected to grow at a CAGR of close to 12.8% from 2020 to 2027 and reach a market value of over $5.6 billion by 2027. Big pharma names such as Pfizer (PFE, Financial), Johnson & Johnson (JNJ, Financial), AbbVie (ABBV, Financial), Bristol-Myers Squibb Company (BMY, Financial) and Biogen (BIIB, Financial) are all actively researching within this domain.
Any small player with promising research potential in this area could become an excellent acquisition target for these big companies, who would be willing to pay a rich premium for the growth potential of such treatments. In this article, we will look at two emerging biotech players whose Alzheimer's therapies have made excellent progress on the regulatory approvals front. These companies have fast-growing stock prices and could well become acquisition targets for big pharma.
Hoth Therapeutics
Hoth Therapeutics (HOTH, Financial) recently released highly positive proof-of-concept data that was generated using an Alzheimer's disease mouse model, supporting the therapeutic potential of its candidate, HT-ALZ. The company had been working on the effectiveness of HT-ALZ along with Washington University in St. Louis. The objective of its research was to investigate the effect of orally administered HT-ALZ to reduce the concentration of amyloid-beta in the brain interstitial fluid, using an established Alzheimer's Disease mouse model. High levels of amyloid beta are known to contribute to the clinical symptoms of Alzheimer’s Disease and dementia. As per Hoth’s press release, there was a significant decline in both male and female mice test subjects as compared to placebo-treated animals.
As we can see in the above chart, the announcement resulted in Hoth’s stock price more than doubling in a single trading session. It is worth highlighting that the company has nine drugs in its pipeline, catering to a wide variety of diseases like asthma, atopic dermatitis, acne, skin toxicities related to cancer therapy psoriasis, chronic wounds and pneumonia. Its BioLexa topical formulation catering to atopic dermatitis and eczema flares is another high-potential candidate that is advancing rapidly.
Interestingly, the company has always been perceived as more of a skin disease-focused player given the progress of BioLexa and HT-001, its other main skin candidate catering to cancer patients suffering from cutaneous toxicities. The progress of the Alzheimer’s Disease therapeutic is a highly positive development. I believe that the highly diversified nature of the company’s drug candidates does reduce the overall investor risk as compared to other emerging biotech companies.
Longeveron Inc.
Longeveron Inc. (LGVN, Financial) made a major breakthrough a few weeks ago when the company received the Orphan Drug Designation for its candidate, Lomecel-B, for the treatment of Hypoplastic Left Heart Syndrome, a rare and life-threatening congenital heart defect in infants.
As we can see in the above chart, Longeveron skyrocketed after the big announcement but saw a significant amount of profit booking and is now closer to the $11 level.
The company more recently announced the initiation of its Phase 2a clinical trial in order to evaluate Lomecel-B as a treatment for Alzheimer’s disease. Longeveron had a successful Phase 1 with positive data and the management is looking to build on the same by looking to measure brain anatomy using MRI and other detailed assessments of the inflammatory and vascular systems contributing to Alzheimer’s Disease in its Phase 2a trials.
In this phase, the company is using a double-blind, randomized, placebo-controlled design to confirm the safety and tolerability of Lomecel-B. It is conducting the study across a minimum of six centers with four treatment arms of 12 patients each, resulting in a total target enrolment of 48 patients. In this study, Longeveron is also looking to cover secondary endpoints that include cognitive function and biomarkers, after single as well as multiple infusions of Lomecel-B compared to placebo in patients suffering from mild Alzheimer’s Disease. If the company manages to succeed in this trial, we can likely expect another big spike in Longeveron’s stock price.
Final thoughts
Both Longeveron and Hoth Therapeutics have shown excellent promise in their research on Alzheimer’s Disease. Hoth is a more diversified biotech player whereas Longeveron is betting mostly on Lomecel-B alone for its future, but then again, Longeveron has revenue traction from grants and a lower risk of dilution.
Despite the triple-digit jump in their stock prices, I believe that both these companies have a long way to go. Investors must beware of the typical risks associated with emerging biotech investments such as the absence of sustainable revenues, ongoing equity issuances to raise funding, and at times, even low traded volumes. However, I believe that investors within the biotech domain with a high risk appetite may find these two stocks appealing.
