Alzheon files for $80M IPO to take once-failed Alzheimer’s drug into PhIII

A company based just outside Boston is joining the parade to the public markets, hoping to raise $80.5 million to develop an Alzheimer’s drug that’s a true Hail Mary, considering the field’s recent implosions.

Martin Tolar

The drugmaker, Alzheon, filed a notice with the SEC signaling its upcoming IPO, but the company might need more cash than it can raise in this round. Back in 2016, Alzheon’s CEO Martin Tolar told Endpoints News the company would need more like $100 million to pay for two Phase III studies for its lead drug — and that would be a bargain compared to most late-stage Alzheimer’s programs.

Tolar — the biggest shareholder with 44% of the stock — also needs the cash. He only had a little more than $6 million on hand at the end of December after burning through about $24 million. He’s committed to paying a royalty stream to FB Health, which out-licensed the rights to the drug, in the event they can win an approval.

Alzheon is developing an amyloid-blocking drug called ALZ-801 (tramiprosate), which it licensed from Montreal-based Neurochem back in 2013. Since the drug flopped in Neurochem’s trials, Alzheon made some tweaks to the once-daily pill that the company hopes will get the drug to its target more quickly while reducing side effects in the gut.

In its S-1, the company tells investors that they met with the FDA and went over the data, pointing to a post hoc analysis of the data indicating that a 150 mg dose of the drug among APOE4/4 homozygous patients registered an impact on cognition and daily function, the gold standard that has defeated virtually everything thrown at it over the last 15 years. By sticking with a clearly defined group of patients, the biotech believes it can avoid recruiting patients for its study who don’t actually have the disease. But FDA officials say the data were only from a small subset of patients and didn’t prove efficacy. Furthermore, the agency told the company they might have to run a second Phase III trial to prove any positive results they gained from the first one.

Alzheon is focusing on a strategy very similar to the one adopted by Axovant $AXON: taking a failed drug and relying on existing data spied in a post hoc analysis to prove it’s both safe and potentially effective for a specific population of patients. Of course, the effort proved futile for Axovant, which watched its stock plummet nearly 80% when its Alzheimer’s drug crashed and burned in a Phase III study.

It doesn’t help Alzheon’s odds that its pursuing the amyloid beta hypothesis, which has defeated every drug thrown at it so far in a pivotal study. Eli Lilly $LLY tried this route for treating Alzheimer’s with solanezumab, but scrapped the program for treating symptomatic patients a couple years ago thanks to a series of Phase III failures. The drug is currently being studied to see if it can delay the development of preclinical patients.

Alzheon, which will list on the Nasdaq under the symbol $ALZH, plans to start a Phase III trial of ALZ-801 in the US and internationally in 2018, according to the company’s SEC statement. First, though, it will have to overcome some scathing reviews.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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