Tiny Swedish biotech not taking back seat to US in Alzheimer’s race. How to buy it.

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The News:

BioArctic AB, based in Stockholm, said it has clinical results showing its antibody treatment that targets amyloid plaques, a hallmark of Alzheimer’s disease, can slow the disease’s progression.

The trial tested the antibody in 856 patients with early-stage Alzheimer’s disease with plaques of amyloid-beta protein in their brains, which is considered a common hallmark of the disease. Results taken at 18 months after the first treatment showed that it met the key clinical endpoint of slowing down disease progression.

This was measured in patients receiving the highest treatment dose using a set of tests for cognitive functions such as memory. The antibody also reduced the amount of amyloid plaques in the brain, measured using a PET scan.

The treatment, called BAN2401, is a monoclonal antibody that targets toxic chains of amyloid-beta, says Labiotech.eu. According to BioArctic, this is the first time an Alzheimer’s treatment demonstrated the potential to slow disease progression and reduce amyloid plaques in a late-stage clinical trial. BAN2401 is the most advanced candidate in BioArctic’s pipeline.

Eisai obtained the global rights to study, develop, manufacture and market BAN2401 for the treatment of Alzheimer’s disease pursuant to an agreement concluded with BioArctic in December 2007. In March 2014, Eisai and Biogen entered into a joint development and commercialization agreement for BAN2401 and the parties amended that agreement in October 2017.

BioArctic, founded in 1992, is a biopharma company focused on developing treatments, biomarkers and other diagnostics for neurodegenerative diseases. The company is partnering with Japan’s Eisai Co. Ltd. and AbbVie Inc. (North Chicago) on projects for Alzheimer’s and Parkinson’s disease, respectively.

BioArctic said the results of the BAN2401 Phase 2b clinical study will be presented in an oral session at the 2018 Alzheimer’s Association International Conference (AAIC) on July 25, 2018. The AAIC is the world’s largest conference for the latest scientific research and clinical developments for Alzheimer’s disease. AAIC 2018 will be held in Chicago at McCormick Place July 22-26, 2018.

BioArctic closed the week up 24% to 99.00 Swedish kronor in Stockholm. Shares are up a massive 432% since their year-to-date low of 22.80 kroner on July 5, 2018.

Steve’s Take:

Developing treatments for Alzheimer’s has baffled researchers for decades and even tiny steps forward have proven to be extremely difficult, to put it mildly.

So far, the FDA and EMA have approved a total of only five Alzheimer’s drugs, despite the fact that over 400 clinical trials were run between 2002 and 2012 and more than 100 experimental drugs have failed.

For example, Eli Lilly & Co.’s (Indianapolis IN) promising amyloid-targeting drug solanezumab3 flopped in 2016, after which Lilly abandoned its development. Additionally, Merck, Pfizer, J&J and Roche have all failed in Phase 3 trials for Alzheimer treatments.

Most Alzheimer’s drugs in previous development were based on the amyloid hypothesis, which states that the disease is caused by an accumulation of amyloid plaques in the brain. However, some patients have the plaques without developing any symptoms.

Moreover, reducing the levels of amyloid plaques does not always improve symptoms. This may explain why so many amyloid-targeting drugs fail, and suggests the need to explore other ways to treat Alzheimer’s disease.

Just two weeks ago, Biogen Inc. (Cambridge MA) surged the most in seven years after the same Alzheimer’s drug showed positive results in a large clinical trial. Alzheimer’s progressed more slowly for patients who got the highest dose of the experimental drug, BAN2401, Biogen and its Japanese partner Eisai Co. Ltd. (Tokyo) said in a statement.

The results after 18 months of treatment took investors by surprise, following a failure in December after 12 months, Bloomberg reported. While the ultimate outcome of BAN2401 remains far from certain, the study is a bright spot–if a fragile one–in the search for a treatment for AD.

Drugmakers have persisted in part because of the size of the potential market–as much as $30 billion in the US alone, according to Sanford C. Bernstein & Co. analysts. The success of BAN2401 will depend on the details of the data, set to be presented at the AAIC annual meeting next week, according to Bloomberg.

Bottom Line:

The good news drought in Alzheimer’s has roused investors’ hunger for positive results. But many analysts point to the unknowns about the trial at this stage. Recall that the study is in Phase 2, or mid-stage, and the data would need to be validated in broader testing.

“The question is, is it real?” Bloomberg’s Sam Fazeli said. “When we see the data, will the room be filled with oohs and aahs, or will the room say, ‘oh my god, not again?’”

The result of the study, which involved more than 800 patients, was a “best case” scenario for the drug, Jefferies analysts led by Michael Yee wrote in a note. Expectations were low after the December readout didn’t hit its goals, while other recent Alzheimer’s studies have also flopped.

Given the high number of previous failures and the uncertainty over whether amyloid plaques do in fact cause Alzheimer’s disease, BioArctic’s results are extraordinary. Even the wistful promise of a small breakthrough deserves a buy, in my opinion—preferably before the AAIC presentation on July 25, 2018–which I am betting will receive a resounding ovation.

So, you have a high risk-tolerant compartment of your investment portfolio and this news has awoken your interest in something resembling a rocket ship blasting off. How do your buy BioArctic, directly? How do you buy stocks on non-US exchanges? How do you do so using a different currency? Will the commissions be excessive?

Not all biotech wonder stocks are traded on US exchanges.

While there are ADRs listed as Pink Sheets or over-the-counter stocks (OTC), these issues suffer from low liquidity and are subject to currency fluctuations. Many investors are skeptical in general of stocks traded over-the-counter.

One solution to this problem is to use Interactive Brokers Group (Greenwich CT). They are the biggest online broker and routinely among the top-rated online brokers by the likes of Forbes and Barron’s.

Let’s use Swedish-based BioArctic (STO:BIOAB) as an example. Let’s say you want to buy 100 shares on the Nasdaq OMX Swedish/Nordic exchange instead of the OTC issue. First, we can look up the price at a lot of online sites such as Bloomberg.com.

The price is quoted in Swedish Currency (SEK) so we’ll need to but some SEK first. With a quoted stock price of 101 SEK, we’ll need 10,100 SEK to buy 100 shares of BIOAB. Using www.XE.com, we can see this is equivalent to roughly 1,111 US dollars at today’s price. First let’s purchase 1,200 USD of SEK so we can take into account commissions.

We see that the confirmation tells us the cost of purchasing 1,200 USD of SEK including commissions amounts to roughly 10,584 SEK.

We execute the order and purchase 10,584 of SEK. Now we want to purchase BIOAB on the Nasdaq OMX Swedish/Nordic exchange. Note that we make sure the transaction is taking place in SEK using the ticker BIOAB which assures us we are purchasing the Swedish issue and not the OTC issue.

We put through the order and now own 100 shares of BioArctic purchased on the Nasdaq OMX Swedish/Nordic exchange and denominated in SEK. The total transaction cost amounts to roughly the same commission cost incurred when purchasing the OTC issue through many other brokerage firms. And you will have diversified the currency risk by purchasing the shares in SEK.

Steve's Take: #BioArctic #investment is only for a high-risk portfolio, too many promising #Alzheimer's drugs have failed to gamble on BAN2401 Click To Tweet

Final thoughts:

Despite the hullaballoo, it remains to be seen how BioArctic’s treatment will fare in Phase 3–the graveyard of crushed hopes for so many promising  Alzheimer’s drugs and even more clinical trials. Falls into the “high-risk portfolio” category for certain. But still based on some promising, “hard” data, so not a pure gamble. Stay tuned, and I’ll report on the company’s AAIC presentation for BAN2401 next week.

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