Why could cassava succeed with its Alzheimer’s drug when so many of them failed?

Cassava science (NASDAQ: SAVA) is like any other unprofitable biotech – it has a drug in a clinical trial, and its investors are hoping the drug will work so they can make a lot of money. What makes cassava really interesting is that it zigzags where Big Pharma zigzags when it comes to Alzheimer’s research. This field has a huge market opportunity, perhaps worth $ 100 billion or more for a working drug.

For years Alzheimer’s research has been dominated by a theory that I am convinced is in the wrong direction. Cassava has a completely different theory about what causes Alzheimer’s disease – and the company has positive Phase 2 data on a drug it has formulated to address it.

It got me excited about cassava. But first, let’s take a look at why research on Alzheimer’s disease has been stalled for so long.

Big Pharma focused on the wrong theory

All patients with Alzheimer’s disease appear to show amyloid plaques – abnormally configured proteins – in scans of their brains. But the reverse is not true: people can have amyloid plaques on the brain and not have Alzheimer’s disease. This strongly suggests to me (a non-scientist) that amyloid plaques are not the cause of Alzheimer’s disease.

Alzheimer’s disease research has been a graveyard for Big Pharma for decades. According to one count, there have been 130 unsuccessful drug development attempts since 1998. Almost all of this research has been based on a fragile premise – that amyloid plaques are the cause of Alzheimer’s disease. And treatments developed on the basis of weak theory are unlikely to be successful.

This history of treatment failure for Alzheimer’s disease (over two decades) has taken a surprising new turn this year. The United States Food and Drug Administration recently approved a new Alzheimer’s disease drug, Aduhelm, from Biogen (NASDAQ: BIIB). The drug has not shown any efficacy in treating Alzheimer’s disease, which is not surprising given that it focuses on amyloid plaques. But what shocked the world – and the doctors on the advisory panel – was that the FDA approved the drug anyway.

What’s going on with the FDA?

Aduhelm failed to beat the placebo. The drug was successful in clearing the amyloid plaques, but it didn’t help Alzheimer’s patients get better. This is why the FDA’s advisory committee, made up of doctors, voted almost unanimously to reject the drug request. (One person voted “unsure.”) Not only does Biogen’s drug fail to beat the placebo, it also causes brain hemorrhages in some patients. When some FDA politicians decided to endorse Aduhelm anyway, three of the doctors on the advisory board resigned in disgust.

There’s more: Biogen plans to bill Medicare $ 56,000 per patient for a drug that doesn’t really work and could actually hurt the patient. And the final price could be even higher.

Why would the FDA approve a drug that is no better than a placebo that could cause brain hemorrhages? My first reaction was that something was wrong. It really looks bad enough that the acting FDA commissioner calls for an investigation in his own agency.

Having said that, it may just be a mistake. People make mistakes. And that could be a good example of smart people falling in love with a story and ignoring reality.

The story is that we need to get rid of these amyloid plaques. What if we stop going down that particular rabbit hole and look at other things that could be causing Alzheimer’s disease? Maybe we’ll find a drug that actually works.

Two possible investment candidates

Alzheimer’s disease is a huge market opportunity, which is why Big Pharma has pursued it for so long. My investment thesis is that biotech companies that have abandoned the amyloid plaque theory have a much better chance of success.

Two names that have popped up on my radar, thanks to my colleague Jason Hawthorne, are Cassava Sciences and Annovis Bio (NYSEMKT: ANVS). Cassava researchers noticed that Alzheimer’s patients have a mutated protein called filamin A. So they designed a drug that corrects this mutation and restores its proper shape and function. The Phase 2 data for the drug is really solid, so my family bought shares in the company.

I also considered investing in Annovis. Annovis has a drug candidate that targets several proteins, including amyloid proteins. The company says its drug works for Parkinson’s disease as well as Alzheimer’s disease, but it has only been tested in four people. While the Phase 2 trial is larger (69 people), 54 people in the study have Parkinson’s disease and not Alzheimer’s disease. An early release of the data, which caused the stock to drop dramatically, only involved 14 people.

The main problem with Annovis is that the company only has $ 49 million on the books. That’s not enough money for a Phase 3 trial. The hope, of course, is that the stock goes up enough for the company to sell shares and fund pivotal trials. Without money, the drug is at a standstill.

In his 10-K, Annovis says:

By the end of 2024, we expect to have conducted two pivotal studies for ANVS401, one in [Alzheimer’s disease in patients with Down syndrome] and one in [Parkinson’s disease], and have filed one or two New Drug Applications (“NDAs”) with the United States Food and Drug Administration (“FDA”).

Annovis’ optimistic scenario is that it will have the money to complete its Phase 3 trials in 2024. But Alzheimer’s disease in people with Down is a small market opportunity. At this time, the company does not have a Phase 3 trial project in Alzheimer’s patients (apart from the Down cohort). And he doesn’t have any money for such a trial, anyway.

Cassava, in contrast, begins its Phase 3 trial in patients with Alzheimer’s disease later this year. Although the company is small, its science has been partially funded by the National Institutes of Health. And so far the action has been a wild ride for early investors.

It’s cassava

If you want to buy shares of a company seeking a cure for Alzheimer’s disease – potentially a $ 100 billion market opportunity – and want to avoid the amyloid plaque debacle, cassava seems be a good candidate.

The company’s drug could still fail, of course. Even if Cassava pursues the correct theory – always a question mark – his execution could be halted. But the way investors avoid too much pain is to make a small investment. If the pivotal trial later this year is successful, the benefit is huge. And if the drug disappoints, your inconvenience is limited.