Alpha Cognition could have a best-in-class Alzheimer’s drug, iA Capital says

Chelsea Stellick of iA Capital Markets likes what she sees in Alpha Cognition (Alpha Cognition Stock Quote, Chart, News, Analysts, Financials TSXV:ACOG), initiating coverage with a “Speculative Buy” rating and target price of $5.00/share for a projected return of 265 per cent in an update to clients on October 19.

Founded in 2000 as Neurodyn Cognition and headquartered in Vancouver, the company rebranded to Alpha Cognition in 2020. A clinical stage biopharmaceutical company, Alpha Cognition is dedicated to developing treatments for under-served neurodegenerative diseases such as Alzheimer’s Dementia as well as Amyotrophic Lateral Sclerosis (ALS) or Lou Gehrig’s Disease.

The company’s lead drug candidate ALPHA-1062 is a next-generation patented acetylcholinesterase inhibitor (AChEI) that belongs to a class of Alzheimer’s Dementia drugs that are the standard of care treatment options, averaging more than 20 million prescriptions annually over the last decade. 

“ALPHA-1062 is a patented prodrug of galantamine, administered orally, with reduced side effects to improve tolerability,” Stellick said. “ALPHA-1062 could offer a potential best-in-class treatment option for the 45 per cent of patients who discontinue AChEIs within a year of starting treatment, mainly due to gastrointestinal (GI) side effects.”

ALPHA-1062 is currently in a de-risked trial with strong data behind it, Stellick said, while noting that the trial results only require bioequivalence rather than efficacy, which makes the trial faster and smaller than typical Phase 3 trials. As a result, ALPHA-1062 may be in position to file its New Drug Application in 2022, with the approval having a lower risk of failure because the bioequivalence has already been shown in previous studies, which also showed reduced diarrhea, nausea, and vomiting in patients.

Upon ALPHA-1062 receiving the necessary approval, Stellick notes that company management expects to hire a team of around 100 sales reps to detail long-term care and neurology specialists, significantly expanding upon its present operation of 19 employees and contractors. 

In addition to its primary deployment, Alpha is also looking at ALPHA-1062 as a possible combination treatment with memantine for severe AD, and in a nasal formulation for mild traumatic brain injuries. 

Though the lion’s share of Alpha’s valuation comes from the ALPHA-1062 progress, Stellick notes that another of the company’s developing assets, ALPHA-0602, is an early stage gene therapy of progranulin, with Orphan Drug Designation being developed for ALS.

Alpha recently reaffirmed its commitment to moving forward in the scientific community with the formation of a Scientific Advisory Board made up of industry leaders in neurology and psychiatry, chaired by James E. Galvin, MD, MPH, with the aim of helping management advance the company’s clinical development pipeline and to develop highly differentiated products to treat neurological diseases with significant unmet needs.

“The prestigious group of scientific thought leaders we have assembled to sit on our Scientific Advisory Board will provide Alpha Cognition with relevant expertise as we further the development of our clinical pipeline and get closer to commercialization,” said Michael McFadden, CEO of Alpha Cognition in the company’s October 1 press release. “Each member brings unique experience from early-stage research to the late-stage clinical development in neurology. I believe this collection of brilliant minds and experience will serve us well as we develop assets in neurology, with a focus on our lead development candidate, ALPHA-1062.”

With probability adjustments in play, Stellick projects the company to begin generating revenue with $12.2 million in 2024 from Alzheimer’s Disease treatments, which remain the lone revenue stream in 2025 at a projected $43.5 million. In 2026, revenue from mild traumatic brain injury treatments enter the picture at a projected $2.34 million of the $99 million overall forecast for the year, eventually growing to a share of $26.4 million within a projected $341 million for 2030.

The company also recently completed a public offering valued at approximately $14.4 million at $1.50/share, eventually making its way onto the TSX Venture Exchange through a reverse takeover with Crystal Bridge originally announced in October 2020.

With more than 6.3 million Alzheimer’s patients in the United States and an expectation for that number to double by 2050 and triple by 2060 on account of ageing demographics and new diagnoses, Stellick believes Alpha has a real opportunity to stake its claim within the marketplace.

“Based on existing sales, AChEIs are a >$5 billion market at branded prices,” Stellick said. “Capturing even a small percent of this market would bring an order of magnitude increase in ACOG’s valuation, and very likely be accompanied by a buyout or a Nasdaq uplisting. ALS and mTBI, while smaller, are nonetheless each multi-billion-dollar market opportunities.”

Overall, Alpha Cognition’s stock price has risen by 1.6 per cent for the year to date, topping out at a high point of $1.85/share on September 14.