It may be unusual to see a stock rise close to 100% without a corporate buyout, but in biotech and emerging pharmaceutical companies gains of that size can occur simply with a drug study update from even a small number of patients. Neurotrope Inc. (NASDAQ: NTRP) announced its corporate update after analyzing data from its recently reported Phase 2 confirmatory clinical trial that was examining moderately severe to severe Alzheimer’s disease patients. Those patients were treated with byrostatin-1 in the absence of Namenda (memantine).
Neurotrope said that the analysis to adjust for significant baseline imbalance in Severe Impairment Battery scores between treatment groups showed improvement in cognitive function of the pre-specified Moderate Stratum patients at week 13. That was the primary endpoint, and the company showed that National Institute of Health awarded a $2.7 million grant for the company to conduct additional clinical research for patients with advanced Alzheimer’s disease.
Even after its shares doubled on the news, investors need to keep in mind that Neurotrope does not even have a $50 million market cap and that its shares are still valued at less than half of their peak in 2019.
The excitement for anything positive in Alzheimer’s should be rather obvious. Millions of Americans could be targets of an approved treatment, and with no real drug on the market, there is an obvious mega-blockbuster drug status (over $1 billion per year) for any company that gets one to market.
Neurotrope’s bryostatin-1 is the company’s lead therapeutic candidate for Alzheimer’s disease. The company also has preclinical studies for other rare diseases and brain injuries, which include Fragile X syndrome, multiple sclerosis, stroke, Niemann-Pick type C disease, Rett syndrome and traumatic brain injury.
Dr. Daniel Alkon, Neurotrope’s president and chief scientific officer, said:
A significant imbalance (4.8 points) in the baseline Severe Impairment Battery (“SIB”) scores occurred, by chance, between the Bryostatin-1 treatment group and placebo group. After consulting with our Scientific Advisory Board and statistical experts, we were advised that, in a small study such as this, a baseline imbalance could prevent a definitive analysis of Bryostatin-1 treatment versus placebo in SIB scores at the primary (Week #13) and secondary endpoints as provided in the original Statistical Analysis Plan (“SAP”).
There is also a quote from Kazem Kazempour, CEO of Amarex, the biostatistician retained to analyze the data from the 203 study under the SAP:
Due to the baseline imbalance observed in the study, and because a clear signal of benefit could be observed in the raw data from the pre-specified Moderate Stratum, we conducted a post-hoc analysis using paired data for individual patients, with each patient as his/her own control. For the pre-specified Moderate Stratum (i.e., MMSE-2 baseline scores 10-15), the baseline value and the week 13 value were used, resulting in pairs of observations for each patient. The changes from baseline for each patient were calculated and a paired t-test was used to compare the mean change from baseline to week 13 for each patient. A total of 65 patients had both baseline and week 13 values, from which there were 32 patients in the Bryostatin-1 treatment group and 33 patients in the placebo group. There was a statistically significant improvement over baseline (4.8 points) in the mean SIB at week 13 for subjects in the Bryostatin-1 treatment group (32 subjects), paired t-test p < 0.0076, 2-tailed.
The company’s release indicated that the placebo group was just 33 subjects, but there was also a statistically significant increase from baseline in the mean SIB at week 13. The company indicated that the smaller placebo effect could possibly be due to the imbalance observed even for the Moderate Stratum in the study. A pre-specified trend analysis further showed a significant positive slope of improvement for the treatment groups in the study that was significantly greater than for the placebo group.
While this call was last summer, brokerage firm Janney issued a Buy rating and $14 target price on Neurotrope, calling it as the only current candidate in clinical development for patients with moderate to severe AD. Unfortunately, Janney downgraded Neurotrope to Neutral from Buy and the firm lowered its fair value estimate from $13 to $1 back on September 11, 2019. At that time, the summary said:
We are downgrading Neurotrope from Buy to Neutral and lowering our fair value estimate from $13 to $1 following Monday’s negative data from the Phase II confirmatory study of bryostatin in patients with moderate to severe Alzheimer’s disease (AD). According to the press release, management is conducting a full review to determine potential next steps and will provide an update when appropriate. Although preclinical studies have evaluated bryostatin-1 in other CNS indications, there will likely be no near-term catalysts that could be stock-moving. Without any clarity from management, we do not see upside potential to justify a Buy rating, but do not believe investors will benefit from selling at this level, hence the Neutral rating. We have removed the company’s single asset bryostatin from our valuation and our new fair value estimate of $1 reflects the projected cash per share value.
Again, any positive news when it comes to a potential Alzheimer’s treatment is going to create excitement. That said, it likely will take studies on much larger groups before the FDA will approve a drug targeting this debilitating condition that affects millions of people with no current treatment available.
Neutrotrope’s shares were last seen trading up about 120% at $3.19 on Wednesday morning, and there had already been a whopping 17.7 million shares trading hands in less than an hour. Neurotrope has a $0.62 to $8.40 trading range over the past year, and its market cap was not quite $50 million even after the shares doubled.
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