Eli Lilly has achieved unequivocally positive efficacy outcomes from its Phase III study with the drug candidate donanemab for the treatment of early stage Alzheimer's disease. It's the second positive late stage study result in the last year, with Eisai & Co achieving similarly positive results with its drug Leqembi (lecanemab).
The donanemab study outcome is effectively a confirmatory result for the field of Alzheimer's disease, that shows removing beta amyloid plaque from the brain results in a slowing of the disease. Whilst not a cure, it represents a disease modifying intervention upon which other combination treatments can be built.
Eli Lilly's results were slightly better than that achieved by Eisai, however in Eli Lilly's trial, an enrolment criteria was that patients needed to have at least an intermediate level of the tau brain protein present, which is a predictive biomarker of this disease.
In those with an intermediate level of tau (1182 patients), cognitive decline and decline in functioning was slowed by 35% at 18 months compared to placebo (as measured by the integrated Alzheimer's Disease Rating Scale). Cognitive function as measured by CDR-SB was slowed by 36% compared to placebo.
The side effect of brain swelling (ARIA-E) was consistent with previous studies, with ARIA symptoms in 6.1% of patients. Serious ARIA occurred in 1.6% of patients with three deaths linked to that side effect. However it should be remembered that Alzheimer's disease is a fatal condition.
ARIA has become a known side effect of these therapies, and is likely an indication of efficacy from binding of these drugs to beta amyloid in the brain before they are cleared. It is a side effect that will need to be managed better, and may include more frequent lower doses through subcutaneous delivery (which Eisai is trialing) or different dosing regimens (which Eli Lilly is trialing).
Eli Lilly intends to file donanemab for approval this quarter, and a decision on full approval of Eisai's Leqembi by the FDA is expected on 6 July (an Advisory Committee meeting will be held on 9 June). Given the positive data from Eli Lilly and Eisai with the amyloid binding drugs, reimbursement from the US government through CMS is likely to be reconsidered which will allow widespread adoption of the therapies in the US.
Eli Lilly's results were slightly better than that achieved by Eisai, however in Eli Lilly's trial, an enrolment criteria was that patients needed to have at least an intermediate level of the tau brain protein present, which is a predictive biomarker of this disease.
In those with an intermediate level of tau (1182 patients), cognitive decline and decline in functioning was slowed by 35% at 18 months compared to placebo (as measured by the integrated Alzheimer's Disease Rating Scale). Cognitive function as measured by CDR-SB was slowed by 36% compared to placebo.
The side effect of brain swelling (ARIA-E) was consistent with previous studies, with ARIA symptoms in 6.1% of patients. Serious ARIA occurred in 1.6% of patients with three deaths linked to that side effect. However it should be remembered that Alzheimer's disease is a fatal condition.
ARIA has become a known side effect of these therapies, and is likely an indication of efficacy from binding of these drugs to beta amyloid in the brain before they are cleared. It is a side effect that will need to be managed better, and may include more frequent lower doses through subcutaneous delivery (which Eisai is trialing) or different dosing regimens (which Eli Lilly is trialing).
Eli Lilly intends to file donanemab for approval this quarter, and a decision on full approval of Eisai's Leqembi by the FDA is expected on 6 July (an Advisory Committee meeting will be held on 9 June). Given the positive data from Eli Lilly and Eisai with the amyloid binding drugs, reimbursement from the US government through CMS is likely to be reconsidered which will allow widespread adoption of the therapies in the US.
Positive Developments for Cogstate
These developments are highly positive for Cogstate (CGS: $1.61) which benefits from more trials in Alzheimer's disease (Cogstate's core market), which can be expected to occur following these positive results, and from adoption of its cognitive test in the US which has been licensed to Eisai for use in the community (GP's, specialists, patients and their families).
The take up of the amyloid binding drugs Leqembi and donanemab (if approved) is expected to be gradual even with CMS reimbursement, which appears likely to occur. Up to half of the patients with early Alzheimer's disease are expected to take up these treatments according to some key opinion leaders, with Leqembi priced at US$26,500 a year, and donanemab expected to be sold for a similar price. One US analyst is forecasting peak sales for donanemab of US$17 billion in 2032. Objective cognition testing will be required to help identify patients in need of treatment with these therapies.
March Quarter Performance
Cogstate reported revenue for the March quarter of US$10.9 million, although new contracts signed were just US$3.4 million. The company had a backlog of work totalling US$104 million at the end of March, with the company seeking to secure some larger contracts in the short term. Cogstate has noticed a slow down of work from biotech companies which it attributes to the more difficult funding environment.
Cogstate has announced a 13% reduction in its workforce which will result in cost reductions of US$2.6 million, including from other operating cost savings implemented. The revenue delays from new and existing work is one of the reasons for the cost cutting. The company is also seeking to maximise its profitability in FY2024, which may see a return to acquisition discussions (Bioshares speculation).
Revenue for the current financial year is expected to be slightly lower than 2022, at US$39 - US$41 million with EBIT from normal operations expected to be between US$1.0 - US$2.0 million.
Cogstate is capitalised at $279 million. It finished last year with US$29 million in cash and is currently conducting a share buyback.
Bioshares recommendation: Buy
