Raymond James analyst Rahul Sarugaser is sticking with Alpha Cognition (Alpha Cognition Stock Quote, Chart, News, Analysts, Financials TSXV:ACOG), maintaining his “Outperform 2” rating and target price of $3.50/share for a projected return of 212.5 per cent in an update to clients on Wednesday.
Founded in 2000 and headquartered in Vancouver, Alpha Cognition is a clinical stage biopharmaceutical company dedicated to developing treatments for under-served neurodegenerative diseases such as Alzheimer’s Dementia and Amyotrophic Lateral Sclerosis (ALS).
The company’s lead candidate, Alpha-1062, is a patented new chemical entity of galantamine being developed as a new generation acetylcholinesterase inhibitor (“AChEI”) for the treatment of Alzheimer’s disease that gives rise to minimal gastrointestinal side effects.
Sarugaser’s latest analysis comes as a side effect of the US Centers for Medicare & Medicaid Services (CMS) publishing their national coverage analysis for the amyloid-beta mAb class, producing a coverage with evidence recommendation that restricts Alzheimer’s drug Aduhelm reimbursement to AD patients that participate in a CMS or NIH sponsored study of the drug, limiting the drug’s potential reach for maker Biogen.
That move could have implications for Alpha Cognition, Sarugaser said.
“By now, the CMS national coverage decision on Biogen’s amyloid-beta Alzheimer’s disease (AD) drug has hit your radar, and so the unmet need in AD remains unrequited,” Sarugaser said. “Enter Alpha Cognition that is developing ALPHA-1062: a novel, patented pro-drug of galantamine, which is a widely used, FDA-approved acetylcholinesterase inhibitor (AChEI) indicated for the treatment of patients with mild-to-moderate AD.”
In December, Alpha Cognition released functional data from its ALPHA-1062 intranasal Traumatic Brain Injury (TBI) program, with drug administration significantly, acutely reduced the extent of the functional deficit, and improved functional recovery of TBI animals compared to untreated animals suffering a TBI.
In addition, in four of five functional measures of recovery, the performance of ALPHA-1062 treated group was statistically indistinguishable from that of the uninjured cohort.
“These preclinical results, combined with our clinical data demonstrating the safety and tolerability of ALPHA-1062, support its continued development for the treatment of TBI, which we believe has the potential to help millions of Americans who suffer from a TBI each year,” said Denis Kay, Chief Scientific Officer of Alpha Cognition in the company’s December 6 press release. “We are encouraged by the data thus far and confident in our progress towards developing a safe and effective treatment for this underserved population.”
In combination with the company’s ongoing ALPHA-1062 trial, the company is looking to launch a patient tolerability trial in the second quarter, the data from which Alpha intends to use as an accelerator of adoption and as a tool to petition the FDA to change ALPHA-1062’s label. Notable changes the company hopes to make include adding mechanism of action information, clinical data included,side effect profile, and information indicating that ALPHA-1062’s starting dose is its therapeutic dose, with limited or no titration required.
Alpha Cognition also made an executive change, bringing in Dr. Cedric O’Gorman, who has accrued more than two decades of life sciences experience in clinical development, medical affairs and medical strategy, almost exclusively in the CNS therapeutic area, and across all stages of drug development, as the company’s new Chief Medical Officer.
“As a board-certified psychiatrist, Dr. O’Gorman’s addition to the management team provides critical support for the advancement of our clinical programs,” said Michael McFadden, CEO of Alpha Cognition in the company’s December 2 press release. “His clinical vision and proven leadership, including his extensive CNS medical and research experience, further strengthens our clinical development efforts and support the progress of our product pipeline.”
The update prompted Sarugaser to revise some of his financial projections, though he maintains his initial projection of $17 million in revenue in the fourth quarter of 2023 after not reporting any revenue in 2021, or projecting any revenue in 2022.
Sarugaser’s changes come in his EBITDA projections, cutting the reported loss in 2021 from $11 million to $9 million. His projections remain constant in 2022 at a $7 million loss before turning positive in 2023 at $7 million for an implied margin of 41.2 per cent.
Looking forward, Sarugaser foresees a number of future catalysts for the company, including the release of top-line data in either April or May, a third quarter NDA filing with the U.S. Food and Drug Administration, with a goal of receiving clearance by the middle of 2023 ahead of an implied 2024 drug launch.
“With strong tolerability data, ACOG would have firm ground to stand on while seeking superior reimbursement to galantamine and current standard-of-care AD drugs,” Sarugaser said. “Also, the better ALPHA-1062’s tolerability profile (gold standard: placebo-like), the further market penetration ACOG can expect. We believe a placebo-like tolerability profile could add 10 per cent to ACOG’s base market share; each market share point represents approximately $50 million in sales.”
Alpha Cognition’s stock price has dropped by 14.4 per cent over the last year, coming back down to earth after hitting a 52-week high of $1.85/share on September 14.
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