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TAU Me One More Time

Last Updated on March 21, 2019 by Sultan Beardsley

Alzheimer disease (AD) is the most common form of dementia.  AD is characterized by amyloid plaques and neurofibrillary tangles in the brain, with associated loss of synapses and neurons, resulting in cognitive deficits and eventually dementia. Amyloid-β (Aβ) peptide and tau protein are the primary components of the plaques and tangles, respectively. In the decades since Aβ and tau were identified, development of therapies for AD has primarily focused on Aβ, but tau has received more attention in recent years, in part because of the failure of various Aβ-targeting treatments in clinical. The memory loss and confusion of Alzheimer’s instead is associated with tangles of a different brain protein—tau—that show up years after the plaques first form.

The link between the Aβ and tau has never been entirely clear—until now. According to the tau hypothesis abnormal aggregation of tau protein ultimately leads to the formation of tangles within nerve cells in the brain. Once initiated, the tau aggregation process continues of its own accord, consuming the normal form of tau protein in the process and spreading the aggregation cascade into previously healthy nerve cells.

In Alzheimer’s, tau tangles first destroy nerve cells critical for memory and then destroy neurons in other parts of the brain as the tau aggregation process spreads from neuron to neuron throughout the brain. Tau tangles first appear in the brain some 20 years before the clinical impact of the disease process becomes apparent.

The area has not been without clinical failures and on January 30, 2019, Roche (NASDAQ: RHHBY) announced discontinuing the CREAD 1 and CREAD 2 (BN29552 and BN29553) Phase III studies of the investigational anti-beta-amyloid molecule, crenezumab, in people with prodromal to mild sporadic Alzheimer’s disease (AD). Roche´s analysis indicated that crenezumab was unlikely to meet its primary endpoint. This decision was not related to the safety of the investigational product. No safety signals for crenezumab were observed in this analysis. For the purpose of this article, I want to focus on Roche´s partner, AC Immune (NASDAQ: ACIU). It should come as no surprise that the stock of AC Immune dropped massively given the discontinuation of the phase 3 trial.

ACIU 1-Month Chart From Nasdaq

While the stock looks very volatile let’s not forget that volatility gives rise to opportunities. AC Immune might be the stock you are looking for to pick up cheap and sell high. AC Immune is a clinical-stage Swiss-based biopharmaceutical company, listed on NASDAQ, which aims to become a global leader in precision medicine for neurodegenerative diseases. The Company designs, discovers and develops therapeutic as well as diagnostic products intended to prevent and modify diseases caused by misfolding proteins. AC Immune’s two proprietary technology platforms create antibodies, small molecules, and vaccines designed to address a broad spectrum of neurodegenerative indications, such as Alzheimer’s disease (AD).

In December 2018, AC Immune teamed up with Eli Lilly and Company (NYSE: LLY) and signed a license and collaboration agreement to research and develop tau aggregation inhibitor small molecules for the potential treatment of Alzheimer’s disease (AD) and other neurodegenerative diseases. AC Immune’s Morphomer platform is designed to generate small molecules or “Morphomers” that bind to misfolded proteins, break up neurotoxic aggregates, and inhibit their aggregation and seeding. ACI-3024, also called Morphomer Tau, is one of three therapeutic candidates originating from the Morphomer platform. The other two are Morphomer Abeta and Morphomer α-syn. The platform has also created two diagnostic development candidates, a Tau-PET imaging agent, and an α-syn-PET imaging agent.

ACIU Scientist working from AC Immune Website

AC Immune received an initial upfront payment of CHF 80 million ($79.5 million) and will be eligible for CHF60 million ($59.8 million) in potential near-term development milestones which could potentially amount up to approximately CHF1.7 billion ($1.69 billion). Lilly also agreed to purchase a $50 million note convertible to an equity position in AC Immune. AC Immune assumed the responsibility for moving the inhibitors through phase 1 development of the Morphomer tau aggregation inhibitors, while Lilly will fund and conduct further clinical development. Lilly will receive worldwide commercialization rights for the tau aggregation inhibitors in the area of Alzheimer’s disease. AC Immune announced that it retained certain development rights in orphan indications” and co-development and co-promotion options in certain indications outside AD.

The Science behind ACI-3024

Several chemical series of small molecules (Morphomers) have been identified which selectively and potently reduce toxic intracellular misfolded and aggregated tau. Targeting intracellular misfolded and aggregated tau is widely recognized as an important and attractive potential approach for interfering with the spread of tau pathology throughout the brain. In some proof-of-concept tauopathy models, reduction of tau pathology was also accompanied by a reduction of associated neuroinflammatory markers – another key pathologic feature of Alzheimer’s disease (AD).

Presentation at Jefferies Healthcare Conference, November, 2018

Targeting both intracellular seeds and extracellular spreading by combination therapy of Morphomers and immunotherapy is believed to enables to control Tau pathology progression.  High selective Tau imaging diagnostic will in turn enable more precise patient characterization and potentially more precise prediction of AD progression. The animal model looks promising so far and target engagement demonstrated by reduction of misfolded Tau (MC12) and a reduction of Tau in Cerebrospinal fluid (used as biomarker).

Not For The Faint Hearted

A 2014 Cleveland Clinic study found a 99.6% failure rate of clinical trials for Alzheimer’s drug candidates between 2002 and 2012. That study found high attrition rates for Alzheimer’s treatments, with 72% of agents failing in Phase I, 92% failing in Phase II, and 98% failing in Phase III. I can therefore not stress enough that if you decide to invest in this stock it is a VERY risk bet.

However, that has not deterred some brokerages that see AC Immune as a buy target. For example, Wainwright. H.C.  see the price target at $8 from $18 and believes that the fundamental approach of AC Immune is “de-risking in itself” with multiple targets in multiple modalities. The company possesses one of the deepest pipelines in the neurodegenerative space, Andrew Fein of H.C Wainwright tells investors in a research note.

If you are having the stomach for risk, this might be an interesting stock.

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