A full day has passed since
released their much-anticipated midstage study results of bapineuzumab in Alzheimer's patients.
And both stocks, a day later, are the better for it. Investors offered up an enthusiastic response to the data Tuesday: Elan ended the day up $2.89, or 10.7%, at $30, a price the stock hasn't visited since the fall of 2004. Wyeth ended Tuesday at $45.16, with a gain of a $2.08, or 4.8%.
So what's an average investor to make of the data and the response in shares, you ask? Let's examine the results and action with a little hypothetical Q&A.
What do you think of the phase II data?
As a noted skeptic, I must say that
are better than what I expected to see, specifically the statistically significant benefit seen with bapineuzumab patients who don't carry the ApoE4 gene.
I wasn't going to be surprised to see some trend in favor of bapineuzumab, but I wasn't expecting statistically significant results, especially in a relatively small study.
Aha! I knew you'd convert. The Elan bulls were right -- these data are really spectacular.
Well, not so fast. For starters, Elan and Wyeth have held a lot of data back so that it can be presented at the Alzheimer's meeting next month. And while the ApoE4 "non carrier" patients appear to do quite well with bapineuzumab, the analysis was retrospective and the number of patients small.
I might be a skeptic, but I'm not stupid or blind, so after reading the press release Tuesday morning and talking to a lot of people about it, I have to recognize the fact that bapineuzumab might just be a game-changing Alzheimer's drug. I emphasize the "might" part, however, because there are a lot of questions that remain unanswered, and today's bapineuzumab update is not exactly the home-run result hoped for by the big-time believers.
Not a home run? Well, then it's a base-clearing triple. Did you see the move in Elan's stock price?
I did. The stock made an impressive climb -- up more than 10%. It was an epic battle to get to $30 at the close, with buyers really pushing the stock all afternoon following a relatively muted response in the morning. Let's see what happens over the next few days and weeks after the headlines fade. I'm interested to see if incremental fundamental buyers (not traders) or those previously on the fence will come into this stock in big numbers.
Even before Tuesday's news, I believed that Elan's stock price and $13 billion market baked in a good amount of bapineuzumab upside already. Looking ahead, there is risk involved in the presentation of the full phase II data set at the International Conference on Alzheimer's Disease (ICAD) meeting. Phase III clinical trials have already started but results are two years away.
What is most amazing is the trading volume in Elan shares Tuesday -- about 30 million shares exchanged hands, 10 times the average daily volume.
And lest we forget, Wyeth was up almost 5% Tuesday, too.
Help me understand why the bears aren't giving up on bapineuzumab, despite what looks like positive data.
Instead of me explaining the bear story, I'll just let an Elan short-seller speak for himself -- anonymously, of course.
"So, you see that the trial did not show anything on a prospective basis -- it failed. No mention of trends overall or prospectively. No mention of dose response. However, on a post-hoc retrospective basis, Elan found a plausible subgroup the ApoE4 carriers in which to declare victory. "The trial was not randomized on the basis of ApoE4, and when the details emerge, you will see that the treated patients without ApoE4 were healthier than the placebo patients without ApoE4 accounting for all of the retrospective 'benefit.' Nonetheless, Elan found a way to declare victory, and this is the problem with phase II trials. You can analyze them and spin them to Wall Street anyway you want. If this data had been the phase III data, the trial would have failed."
Geesh, that guys sounds like a sore loser.
Well, he lost money today, so he's definitely not a happy camper. He does, however, make some good points, which is why next month's data presentation remains very important.
Personally, I want to see the data detailing the baseline characteristics of these Alzheimer's patients enrolled in the study. I want to see the actual numerical treatment effect of bapineuzumab in both non-carriers of the ApoE4 gene and those who are carriers. I want to see the benefit of bapineuzumab broken down by the doses used in the study. And I want to see the effect that patient dropouts and discontinuations had on the analysis.
If there were a significant benefit in non-carriers but no benefit overall, as Elan and Wyeth stated in their press release, then it seems possible, perhaps likely, that carrier patients actually fared worse after taking bapineuzumab.
Let me put it another way: In most cases, if I told you that a company released phase II study results where the primary endpoint failed but a statistically significant benefit was seen in a retrospectively defined subgroup of patients, and I then asked you to predict the direction of the stock price for that company, you'd likely say to me that the stock would trade down.
Elan essentially gave us this story Tuesday, yet the stock climbed and the bulls are claiming victory. That's something that doesn't entirely compute, which again, is why seeing the actual entire data from this study is a necessity.
You quoted an Elan short, but what are the bulls saying?
Here's an email I received from someone I consider to be a very intelligent, longtime investor in Elan. He's an "Elaniac" but not a cultist, if you catch my drift. I believe his comments sum up the mood of the Elan bulls quite nicely.
"Very exciting and encouraging results, despite this being four small trials in a very challenging disease, particularly once the ApoE4 carriers and non-carriers are broken out. Results in the non-carrier group are indeed spectacular, and I know that Elan and Wyeth are working hard to focus the design of the ApoE4 clinical trials to measure efficacy in the best ways possible while keeping the dose low to mitigate the safety challenges in this more vulnerable group. "Recall that all patients in this trial as well as in the four phase III trials were/are permitted to be on the older-generation Alzheimer's drugs, so any improvements had to be above that baseline. I note that the press release was written from the perspective of scientists, and not to hype the results, so don't be put off by the absence of phrases such as 'miracle drug' and 'cure for Alzheimer's. I look forward to the presentation at ICAD in six weeks."
All this talk of ApoE4 gene carriers and non-carriers is very confusing. Please explain what it all means.
I'm not an expert either, but simply, ApoE4 is a variant of the ApoE gene that predisposes patients to developing Alzheimer's. If a person has two copies of the ApoE4 gene (one from his mother and one from his father), that person is 15 times more likely to develop Alzheimer's.
If a person has only one copy of the ApoE4 gene, the risk of developing Alzheimer's is elevated by about three times. To make this even more complicated, people without a single copy of the ApoE4 gene can and do develop Alzheimer's.
So, from what we know today about bapineuzumab, it may work in patients who don't carry copies of the ApoE4 gene, but not so much in patients who have one or two copies of the gene.
Let me get this right: In the people less likely to get Alzheimer's, the drug did well. In the people more likely to get Alzheimer's, the drug did nothing? Sounds like a boondoggle. What am I missing?
Wait, are you reading my email, because that's precisely what a reader asked me after reading my earlier column on the study results. It's a great question, but remember, the gene only confers added risk of getting Alzheimer's, it doesn't mean that people without the gene are immune from the disease.
I know you're sick of reading this, but these results underscore the importance of seeing the full data presented next month so that the differences between the carriers and non-carriers can be sussed out in detail.
When will that be?
Tuesday, July 29, during an afternoon session at the ICAD meeting in Chicago.
Will you be there?
Heck yeah, as will the rest of Wall Street's biotech and drug crowd. This is the biggest biotech event of the year, without a doubt.
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
to send him an email.