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Alpha Cognition’s 2022 is catalyst-rich, says iA Capital

Chelsea Stellick of iA Capital Markets is staying bullish on clinical stage biopharmaceutical name Alpha Cognition (Alpha Cognition Stock Quote, Chart, News, Analysts, Financials TSXV:ACOG), maintaining a “Speculative Buy” rating and target price of $5/share for a projected return of 390 per cent in an update to clients on Tuesday.

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

Stellick’s latest analysis comes after Alpha Cognition released preclinical results from its ALPHA-1062 Traumatic Brain Injury (TBI) study, including histology data from its intranasal ALPHA-1062 TBI program in a rodent mode.

Overall, the results indicated positive neuroprotective and neurorestorative effects, with no toxicity signals, and Alpha said when compared to experimental controls ALPHA-1062 significantly reduced lesion size at 35 days post-injury, preserved greater hippocampal structure, significantly reduced neuronal cell loss and significantly enhanced neurogenesis with increased new neurons and neuron precursor cells.

“This histology data combined with the functional recovery data released in December, which demonstrated statistically significant improvements in motor, sensory, and cognitive functioning, strongly support further development of ALPHA-1062 for the treatment of TBI,” Stellick said.

On top of the other key points, Stellick notes that Alpha-1062 has significant neurogenic potential as it can both sensitize the neurons to retain more acetylcholine through its mechanism of action of inhibiting acetylcholinesterase, and increase the responsiveness of nicotinic receptors; both are symptoms of traumatic brain injuries.

“These data, together with the data released previously, demonstrate that Alpha-1062 exhibits both neuroprotection and enhances restoration of sensory, motor, and cognitive performance in this model of moderate traumatic brain injury,” said Denis Kay, Chief Scientific Officer of Alpha Cognition in the company’s February 22 press release. “We are very encouraged by the preclinical data which gives us confidence in the potential of Alpha-1062 to become an effective treatment for TBI. We plan to meet with the FDA to discuss our clinical development plan in the coming months.”

Based on a four per cent probability adjustment, Stellick projects the company will begin generating revenue from traumatic brain injury treatments in 2026 at $2 million, though it could reach as high as $58 million that year. With price appreciation also coming into play beginning with the 2027 fiscal year, Stellick’s probability adjusted revenue goes to $26 million by 2030, though it could have the potential to go as high as $659 million in that year.

From an EBITDA perspective, Stellick projects Alpha Cognition to turn positive in 2025 at $9.3 million, with a PV of $6.4 million. From there, Stellick has a fairly steep growth curve in place for the company’s EBITDA, as she forecasts it to reach $287.1 million by 2030, accompanied by a present value of $123.4 million.

Overall, Stellick expects 2022 to be a pivotal year for Alpha Cognition in terms of potential catalysts, with preclinical data from the ongoing progranulin gene therapy (ALPHA-0602) in ALS expected next month, followed by a pre-IND meeting with the FDA regarding TBI likely late in the second quarter of 2022. From there, Alpha’s lead Alzheimer’s program is expected to provide both pivotal study top line data and initiation of a tolerability trial late in the third quarter of 2022, followed by an NDA submission in the final quarter ahead of potentially gaining approvals early in 2023 ahead of a commercial launch later in the year.

Stellick also believes Alpha Cognition could benefit from a favourable path from the U.S. Food and Drug Administration for its offering, as a number of biotech and pharmaceutical companies have unsuccessfully tried to develop safe and effective products to combat traumatic brain injuries, leaving a disease that three million Americans diagnosed annually without an FDA-approved therapy.

However, any changes to Stellick’s modelling won’t come until after the FDA meeting late in the second quarter, when Alpha Cognition will align its clinical development with FDA guidance.

“We are encouraged by both the histology and the previous functional data for the TBI program and wait for guidance from the FDA regarding an IND to set expectations around entering the clinic,” Stellick said. “Because the intranasal formulation of ALPHA-1062 already has Phase 1 clinical data showing safety and tolerability, we anticipate the potential for quick development given management’s favourable track record of progressing programs.”

Alpha Cognition’s stock price has dropped by 22.4 per cent since it began trading on the TSX Venture Exchange at the end of March 2021, and producing an 11 per cent loss since the start of 2022. To date, Alpha’s share price has peaked at $1.85/share on September 14, which came after hitting a low point of $0.75/share on June 24.

About The Author /

Geordie Carragher is a staff writer for Cantech Letter
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