June 30, 2021
By Linden Thomson , AXA IM biotech portfolio manager, and Peter Hughes , AXA IM longevity and health portfolios manager
The accelerated approval of the first new Alzheimer's treatment in almost two decades looks set to be a potential game changer for the biotechnology sector. Alzheimer's disease is a type of dementia that affects memory and other cognitive abilities. Globally, around 50 million people suffer from dementia; there are almost 10 million new cases annually - and Alzheimer's is the most common form.[i]
However a significant development in the battle against the disease occurred in June, when the US Food and Drug Administration (FDA) approved aducanumab, a drug to be sold under the brand name Aduhelm, which targets what many believe is the underlying cause of Alzheimer's, rather than its symptoms.[ii]
The treatment, developed by neuroscience giant Biogen and Japan’s Eisai, tackles and reduces a type of protein plaque - known as amyloid beta - which forms on individuals’ brains who have Alzheimer's. Essentially the clinical trials showed the drug can slow down the advancement of the disease, something many companies have tried before but with no success.
The breakthrough has been widely welcomed. It has given hope to the millions suffering from the condition, but the scientific community has been divided over the FDA’s decision due to the drug’s phase three trial results, which produced contradictory data – one trial failed while the other delivered more beneficial results. In addition, the trials found there is also the risk of some swelling of the brain.[iii]
In a statement, the FDA said Aduhelm represents a “first-of-its-kind treatment” and that “the reduction in these plaques is reasonably likely to predict important benefits to patients” but it noted that there remains some uncertainty about the drug’s clinical benefit.[iv]
It was approved via the regulator’s accelerated approval pathway programme, a scheme used to get drugs with promising early clinical trial data to patients with serious conditions where few - if any - options are available, enabling Biogen to get its treatment to the market while trials continue.
Usually the FDA wants to see clinical benefits beyond doubt; it wants to know that a drug not only works to treat the disease, not just its underlying cause, but is also safe. As such it took quite an unusual step by approving the treatment based on a so-called biomarker – essentially an indicator of how well the drug can reduce plaque on the brain - as opposed to a functional result. Previously the FDA’s accelerated programme has been typically used to fast-track cancer treatments.
While the approval of Aduhelm is controversial, what there is no argument over, is that the FDA taking this step has kicked the doors open to further investment and innovation in this area. The FDA has shown it is willing to take a pragmatic approach to approvals and we believe this will encourage even greater innovation and investment.
There is currently an abundance of research going on in neurodegeneration, covering - alongside Alzheimer’s - Parkinson’s and motor neurone disease, also known as amyotrophic lateral sclerosis (ALS). We believe Denali Therapeutics, for example, is pioneering in terms of using genetics to treat these conditions.
We believe neuroscience will be one of the key therapeutic areas for the next decade, and the FDA has just lit a fire under that – approving Aduhelm is a game changer for the sector. It has cleared a pathway for numerous other biotech giants such as Lilly and Roche, as well as other younger companies to potentially ramp up their research and development in this area. Neurodegeneration is a huge unmet need and we now expect investment to potentially surge.
Aduhelm is the latest innovation in a cutting-edge sector. Biogen’s follow up drug lecanemab, which has also shown to decrease plaque on the brain, will report phase three trial data next year. In fact, lecanemab was recently granted breakthrough therapy designation by the FDA - an award given to drugs being developed for serious conditions where early data suggests they may provide a substantial improvement over available therapies. The scientific community and investors are also all talking about Roche and Lilly’s similar treatments which are undergoing pivotal trials over the coming 18 months. In fact, Lilly is looking for accelerated FDA approval for its own Alzheimer's drug, donanemab.[v]
There has been amazing progress across the sector; not only have we had the first Alzheimer’s drug approval that can actually treat the underlying condition in almost 20 years, but we also have got the first gene-editing products in clinical trials. People who because of their genetics can’t produce the correct form of haemoglobin – the oxygen carrying component of our blood – are now walking around after having their cells edited with meaningful improvements in haemoglobin production and reductions in the need for blood transfusions.
Ultimately, we believe that right now, it is a great time to be in the biotechnology space. So far in 2021, the US drug regulator’s Center for Drug Evaluation and Research has approved 24 novel drugs, which is the highest it has been by this point of the year for any of the last five years.[vi] The FDA’s decision on Aduhelm has the potential to revolutionise the amount of investment that companies are prepared to commit to further research in this area, which will present exciting new opportunities for investors.
In our view, we continue to ride an unprecedented wave of innovation and looking across the sector, currently there are significant opportunities for us to invest at attractive valuations.
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