Medivation Rallies, but Skeptics Clamor for Caution

Fans and foes of the company's Alzheimer's drug stick to their guns.
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An experimental Alzheimer's disease drug made by



has given both believers and sketpics something to bolster their arguments, after the company announced plans on Monday to move the drug into a phase III trial.

Medivation has received the regulatory sign-off to conduct a single pivotal study for its Alzheimer's disease drug Dimebon. The news sent shares of the San Francisco-based drug company up $1.85, or 13%, to $16.70.

As part of the agreement, the Food and Drug Administration agreed to accept a previously completed phase II study of Dimebon conducted in Russia as one of the two pivotal studies required to support the drug's approval to treat mild to moderate Alzheimer's disease, Medivation said.

The news is significant because Medivation won't have to spend extra money or take more time necessary to run two, phase III trials. To complete its data package for Dimebon, Medivation will begin a single, confirmatory phase III study in the second quarter, the company said, adding that an FDA filing could be ready in 2010.

The FDA agreement is also likely to be viewed by some as a tacit endorsement by U.S. regulators of the phase II Russian study. The data from this Alzheimer's study were strikingly positive for Dimebon, but also controversial because not everyone believes the results could be replicated in the U.S. or Europe.

Medivation joins a roster of companies with Alzheimer's drugs in phase III studies, including







Myriad Genetics

(MYGN) - Get Report


Dimebon skeptics seemed unfazed by Medivation's news and the surge in the stock price. To them, Dimebon is still an

unproven Alzheimer's drug of dubious provenance that Medivation is now rushing into a risky, all-or-nothing pivotal trial.

Here's a quick recap: Medivation burst onto the biotech investment scene a couple of years ago with Dimebon, an old Russian drug previously approved and used in that country as an antihistamine.

A phase II study of the drug conducted in Russian Alzheimer's patients showed remarkable efficacy, with patients improving their cognitive ability and memory compared to placebo after only six months of treatment. When patients in this study were followed for a full year, the positive improvements in their mental status were maintained, and in some measures, increased.

Medivation proclaimed Dimebon to be the next Alzheimer's blockbuster, potentially bigger than market leader Aricept, sold by


(PFE) - Get Report

and Japanese drug maker



But not everyone's been willing to accept the company's claims at face value. For a variety of reasons -- a history of poor and unreliable Russian clinical data; the fact that Dimebon came out of nowhere; or Medivation's hesitancy to conduct another mid-stage study in the U.S. or Europe to confirm the Russian results -- there is a significant segment of investors who simply don't believe in Dimebon.

This is somewhat reflected in the significant short interest in Medivation -- 6.5 million shares, or 26% of the freely trading shares, as of Dec. 26, 2007. And even with Monday's increase, Medivation shares are still down 36% from their highs of three months ago.

The phase III clinical trial announced Monday will enroll 525 patients with mild to moderate Alzheimer's at sites in the U.S., Europe and South America. Two different dosages of Dimebon will be tested (the dose used in the phase II study plus a lower dose), compared against a control arm of patients receiving placebo. Patients will be treated for six months, with standard measures of cognitive function and memory used as the study's primary endpoint for efficacy.

It's important to note that patients participating in the Dimebon study won't be allowed to take other Alzheimer's medications while enrolled. This was the rule in the old Russian phase II study, but it wasn't a significant hurdle since leading Alzheimer's drugs like Aricept or

Forest Labs'


Namenda aren't widely available there.

These drugs are approved and widely used in the U.S. and Europe, however, which could make it difficult for Medivation to recruit patients. (Alzheimer's patients aren't crazy about studies where they may get a placebo, either.)

To accelerate enrollment, Medivation will enroll Alzheimer's patients no longer benefiting from currently approved drugs like Aricept. The company will also seek to convince patients to stop taking existing drugs for nine months so they can be given Dimebon in the clinical trial.

On a conference call Monday, Medivation CEO David Hung disputed the notion that the Dimebon trial design will make it difficult to attract patients.

"We believe that patients will want to enroll in this study because of the Russia

phase II data," which showed a large and durable benefit to patients that occurred within 12 weeks of starting treatment, he said.

Patients also will risk the one-in-three chance of receiving a placebo because nine months without existing Alzheimers drugs isn't too long. These patients will be eligible to receive Dimebon once the study ends, said Hung.

The fact that Medivation will have to enroll Alzheimer's patients who are essentially failing to respond to drugs like Aricept raises considerable problems for Medivation and its phase III study, because these patients are marching toward the advanced stages of disease and are unlikely to benefit from any drug, including Dimebon, says Natixis Bleichroeder analyst Corey Davis, who has a sell rating and a $5 price target on the company.

"I think this significantly lowers the likelihood that the Dimebon study will succeed," says Davis. His firm has no banking relationship with Medivation.

However, Hung disputes that concern. "There is no data to suggest that patients on Aricept are less likely to respond to new agents," he said, adding that since Dimebon and Aricept work differently, there's no reason why Dimebon shouldn't work if given after Aricept, or in combination with Aricept.

Furthermore, Hung pointed to detailed results from the phase II study of Dimebon which showed that patients with moderate Alzheimer's benefited more than those with a mild stage of the disease.

"We have the potential to show even a greater benefit" in the phase III trial, he said.

But that gets back to the question of whether the phase II Dimebon study, conducted entirely in Rusia, is a reliable measure of the drug's efficacy and safety. Medivation and its supporters clearly agree and they are pointing to Monday's announcement to show that the FDA does as well.

Not everyone is convinced.

"If Medivation was really serious about making this happen, instead of angling for a short-term valuation boost, it would be running two phase III trials simultaneously, not relying on the Russian study, says Harry Tracy, president of NI Research, an independent research firm. Tracy has no positon in Medivation.

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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