Medivation Poised for Volatile Spring

Medivation's stock price will rocket -- or crash -- when test results for its Alzheimer's drug Dimebon arrive sometime this spring.
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SAN FRANCISCO (TheStreet) -- Stock-moving biotech events don't come any bigger or potentially more volatile than what lays ahead for Medivation (MDVN) and its experimental Alzheimer's disease drug Dimebon.

Medivation is gearing up to announce results from a phase III study of Dimebon which, if positive, could send the company's stock price soaring to $65 to $75 a share. Call it a double from the stock's Wednesday close of $33.12.

If the Dimebon study fails, look out below. Medivation's stock price will plunge. Where it stops is anyone's guess, but let's says $10-$15 a share -- or a painful 50% scalping from its current price.

The volatility expected in Medivation's stock price is scary and exciting at the same time. It's what biotech investors live for -- and dread. To prepare for the big event, I've put together a discussion of issues surrounding Dimebon, Alzheimer's and the upcoming phase III study results.

The most important question first: When should we expect the Dimebon data to be announced?

Medivation says the announcement should come in the first half of the year, but won't be any more specific. I think a more precise guess is likely March or April, given that the last patients enrolled in the Dimebon study completed the mandatory six months of treatment in December.

Why is so much riding on this Dimebon study?

One word: Alzheimer's. About 5 million Americans suffer from progressive neuro-degenerative disease today, 30 million worldwide, and the number is expected to triple by 2050. Current Alzheimer's drugs are only moderately effective but they still bring in about $5 billion in sales annually.

If the Dimebon study is positive and leads to the drug's approval, sales could easily top $1 billion and possibly much more.

What's this Dimebon study all about?

The phase III study -- dubbed CONNECTION -- compares six months of treatment with Dimebon on its own against a placebo in approximately 600 patients with mild to moderate Alzheimer's. Patients in the study cannot be taking any other drugs for Alzheimer's such as


(PFE) - Get Report

Aricept. The study will be a success if Dimebon can demonstrate a statistically significant benefit versus placebo using both the ADAS-cog and CIBIC-plus scales.

Um... ADAS-cog? CIBIC-plus? What's that?

Oops. Sorry, I slipped into Alzheimer's jargon. Both the ADAS-cog (Alzheimer's Disease Assessment Scale-cognitive subscale) and CIBIC-plus (Clinician's Interview-Based Impression of Change) are commonly used measures of cognition, memory and overall clinical function used to assess Alzheimer's patients.

Over time, the ADAS-cog and CIBIC-plus scores of an Alzheimer patient decline as the patient gradually loses memory, can no longer reason or solve problems, or take care of daily living activities on their own.

No drugs, including Dimebon, cure Alzheimer's, but what Medivation is hoping to show with the CONNECTION study is that treatment with Dimebon can improve a patient's cognitive and overall function for a period to time, or at least slow the progression of the disease.

Alright, so what's it going to take for Dimebon to be a success?

That's a tough call, but roughly speaking, let's say a 2- to 3-point difference in ADAS-cog between Dimebon and placebo (favoring Dimebon, of course). If Dimebon wins on ADAS-cog, the CIBIC score should follow suit.

For comparison's sake, Aricept, the leading Alzheimer's drug in use today, demonstrated a 3-point improvement in ADAS-cog over placebo in its six-month pivotal study.

Is there any Dimebon data from previous studies available to help predict how the drug might perform in the CONNECTION study?

Oh, now we're getting into the controversial bits. Medivation conducted a "pivotal" phase II study of Dimebon, enrolling 183 mild-to-moderate Alzheimer's patients, in which the drug demonstrated a statistically significant four-point improvement in ADAS-cog over placebo after six months. That's the same treatment duration in the CONNECTION study.

The beneficial effects of Dimebon actually increased over time. The ADAS-cog benefit for Dimebon over placebo was 5.9 points at 9 months and 6.9 points at one year. Overall, Dimebon demonstrated statistically significant improvements in memory, cognition behavior and overall function.

Simply put, the Dimebon data rocked.

But wait a second, if the data were so convincing from this older study, what's so controversial or uncertain about the upcoming CONNECTION study?

A certain segment of healthcare investors viewed the Dimebon data as simply too good to be true. Medivation was an obscure, virtual drug company when it plucked Dimebon out of Russia where it was once sold as an antihistamine. The phase II study that yielded such spectacular results was conducted in Russia, which raised concerns about the quality of the data. All this left a lot of people doubting that Medivation could duplicate the benefits of Dimebon in a larger, international study enrolling patients in the U.S. and Western Europe.

How has Medivation responded to this skepticism?

By delivering on its promises. The phase II Dimebon study was published in the prestigious British medical journal

The Lancet

in July 2008. Medivation followed that by signing a

monster partnership deal

for Dimebon with Pfizer in September 2008. The FDA also agreed to accept this data as one of two pivotal studies required for registration.

Pardon the pun, but the Dimebon data has aged well. The results continued to hold up over time and with added scrutiny. This stands in stark contrast to other closely-watched Alzheimer's drug programs that didn't fare as well, most notably



antibody bapineuzumab.

Will the CONNECTION study work?

The billion-dollar question: Yes, I do think the study will be positive. I give it 60:40 odds in favor of Dimebon. I'd call my feeling cautiously optimistic.

What are the keys to Dimebon's success in the CONNECTION study?

Perhaps the most important thing is making sure that the placebo patients in the study don't do better than expected. Phase III studies often fail, including those in Alzheimer's, because placebo or control patients do a lot better, nullifying the treatment effect of whatever drug is being tested.

Medivation has tried to mitigate against any surprises in the placebo arm by keeping a tight rein on the baseline disease severity of the Alzheimer's patients entering the study. The more the patients skew towards the moderate end of the Alzheimer's scale (as opposed to mild disease), the better chance there will be for Dimebon to show a positive effect and for placebo patients to decline.

Medivation has also taken care to ensure that all patients in the study are not taking other Alzheimer's medicines like Aricept. If patients were on other drugs, they had to stop to make sure the beneficial effects of those medicines were washed out before entering the Dimebon study.

What are the next steps for Medivation if CONNECTION succeeds?

You mean after the celebration? Medivation and Pfizer will wait for data from another phase III safety trial expected later this year. With all that data in hand, the companies could file Dimebon with the FDA before the end of the year.

And if CONNECTION fails?

It will be a big blow, no doubt, but the companies are running three other phase III studies of Dimebon in Alzheimers, testing the drug in combination with Aricept and

Forest Labs'


Namenda. Dimebon won't be put on the shelf if CONNECTION fails, but any confidence investors had in the drug will be badly shaken.

Last question: If Dimebon works, will this mean that Medivation CEO David Hung is a shoe-in for your 2010 Biotech CEO of the Year Award?

No one is a shoe-in for anything so early in the year, but I'd say that Hung would be the heavily favored frontrunner, for sure.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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