Neurology’s Return
Though less explosive than that of obesity, neuroscience’s return is marked by rising deal numbers, notable clinical progress and even an IPO filing.
A trio of big M&A deals in 2023 - Bristol Myers Squibb’s $14 billion acquisition of Karuna Therapeutics, AbbVie’s $8.7 billion deal for Cerevel and Biogen’s $7.3 billion Reata buy – mark Big Pharma’s renewed interest. Biogen’s prize included marketed Skyclarys for a rare neurological disorder. BMS – in the biggest CNS-focused deal of the last decade - struck just weeks after Karuna submitted schizophrenia candidate KarXT to FDA. AbbVie took a bigger punt on emraclidine, a similar schizophrenia program at Cerevel, which is still in Phase 2.
Cerevel was spun out of Pfizer in 2018, but Pfizer has since pivoted back into the space with its 2022 acquisition of Biohaven’s migraine portfolio. Meanwhile, Johnson & Johnson’s fastest-growing drug in 2023 was depression treatment Spravato (esketamine), and two Phase 3 programs in adjunctive depression are due to read out this year. J&J execs are calling neuroscience R&D a ‘top priority’.
Financings aren’t far behind: Engrail pulled in a $157 million Series B in March 2024, weeks after Alto Neuroscience become one of just a handful of 2024 IPOs. Neumora’s $250 million listing in September 2023 was one of the year's top five; its lead navacaprant is in Phase 3 for depression.
*Deals with majority CNS pipeline assets; excludes generics/specialty, medtech.Source: Evaluate Pharma
The triggers of neuroscience’s newfound popularity? Decades of relative under-investment in the area have left huge unmet need and compelling commercial opportunity, with little competition. Amid an ongoing mental health crisis with limited treatment choice, “you don’t need a cure to have a blockbuster drug,” says Paul Matteis, managing director and head of therapeutics research at Stifel. “Even subtle differentiators can be enough” to be successful. (Spravato, despite its REMS drug safety program and supervised in-office administration, sold close to $700 million in 2023.) And there’s plenty to go after: the neurology arena encompasses widespread degenerative conditions like Alzheimer’s or Parkinson’s, as well as epilepsy, depression, migraine, pain and multiple rare diseases.
The Alzheimer’s therapy market has provided another catalyst for CNS’ return. An FDA decision was expected in Q1 2024 for Eli Lilly’s Alzheimer’s candidate donanemab, but has been delayed by a last-minute call for an advisory committee. An approval is widely anticipated, though, and will set up the first real competition to Biogen/Eisai’s Leqembi (lecanemab) which in July 2023 became the first amyloid-beta-targeted antibody to gain full US approval. (Biogen formally discontinued its controversial pioneer Aduhelm in January.)
Neither donanemab (assuming it’s approved) nor Leqembi are likely to fly off the shelves - they require complex diagnostic tests, are cumbersome to administer (IV drip) and are not widely reimbursed. But they nevertheless mark important progress in a field where success has been elusive. There are now over 100 Alzheimer’s programs in Phase 2 testing or later, according to Evaluate. The highest-profile late-stage candidates include Lilly’s donanemab and Phase 3 follow-on remternetug, given as a sub-cutaneous injection, and Eisai’s anti-microtubule binding region tau antibody.
Alpha Cognition
Alpha-1062 (pro-drug of galantamine)
Filed
Phase 3 (Alzheimer’s psychosis)
AL-101 (anti-sortilin1 antibody, increases progranulin)
Source: Evaluate
Failure still looms large: Roche’s Phase 3 Alzheimer’s hopeful gantenerumab fell in 2022. Sage Therapeutics’ Zurzuvae (zuranolone) in 2023 was approved in post-partum depression but missed a hoped-for approval in major depressive disorder, sending the biotech’s stock and employee count plummeting. Early this year, Anavex Life Science’s Phase 2/3 blarcamasine failed in the rare neurodevelopmental disorder Rett’s syndrome and some question its Alzheimer’s study results so far.
All of which explains why neurology’s low hanging fruits remain so attractive. Pfizer’s 2022 BioHaven acquisition – which arguably marked the start of neurology’s full return to Big Pharma radar screens – set the tone of later-stage, low (er) risk deals in the space. BioHaven’s migraine drug Nurtec ODT (rimegepant) was approved, with a known mechanism of action (calcitonin gene-related peptide receptor (CGRP) antagonist) and a celebrity-backed D2C US marketing campaign to boot. Pfizer reaped further reward last year when CGRP nasal spray Zavzpret was among FDA’s eight new CNS drug approvals of 2023. An approval decision for Karuna’s KarXT is expected before the end of September 2024.
Most CNS buyers, like Pfizer and BMS, shun even mid-stage clinical risk. Pfizer, still a Cerevel shareholder and an obvious buyer, wasn’t interested in buying the biotech prior to the Phase 2 read out of its schizophrenia candidate emraclidine, due in the second half of 2024, according to SEC documents. Another potential buyer had similar reservations.
Karuna (now BMS)’s KarXT (xanomeline-trospium) combines two older drugs, one of which dulls the side-effects of the other. Xanomeline, which stimulates certain kinds of muscarinic receptors, was discovered in the 1990s by Eli Lilly and Novo Nordisk and found to be effective in Alzheimer’s and schizophrenia.
But it led to intolerable GI side-effects. So Karuna’s team combined it with overactive bladder drug trospium, which blocks peripheral muscarinic receptors believed to mediate those GI effects. “There’s a lot we can do by starting with drugs that have efficacy, but also some flaws,” said Daphne Kohar, founding CEO of Karuna founder PureTech, on January 16th’s Biotech Hangout podcast.
If approved, KarXT may face competition from AbbVie/Cerevel’s emraclidine, which is also aiming for fewer unwanted effects, in this case by hitting only subtype M4 muscarinic receptors. Neurocrine Biosciences also has an M4-selective agonist in Phase 2 for schizophrenia.
Enhanced selectivity features elsewhere in the quest for more effective, safer CNS drugs. Kappa opioid receptor (KORs) antagonists like Johnson & Johnson’s aticaprant or Neumora’s navacaprant are more selective for KORs than other opioid receptor sub-types like mu or delta; both are in Phase 3 for major depressive disorder and may have potential in anxiety and substance abuse disorders. KORs are scattered throughout the nervous system and modulate multiple mood-, stress- and reward-related processes, in part via their influence on the dopaminergic system – the target of many marketed anti-psychotics – and on other neurotransmitters such as serotonin.
Psychedelic drugs are also being re-purposed for medical use.
Lykos Therapeutics (previously known as Multidisciplinary Association for Psychedelic Studies, MAPS) in December 2023 submitted to FDA a new drug application for capsules of midomafetamine – the active ingredient in street drug ecstasy – for the treatment of post-traumatic stress disorder. Compass Pathways’ synthetic psilocybin, the key ingredient in magic mushrooms, is in Phase 3 trials for treatment-resistant depression. Cannabis has already found its way into medicine cabinets, including via Jazz Pharmaceuticals’ seizure drug Epidiolex (purified cannabidiol, one of the main components of cannabis – but not the one that gives a ‘high’). Epidiolex was central to another of this decade’s neurology mega-deals: Jazz’s $7.2 billion acquisition of GW Pharmaceuticals in 2021.
Growing interest in the therapeutic potential of psychedelic drugs prompted draft FDA guidance in mid-2023 to support sponsors’ clinical investigations.
Meanwhile, in a slowly thawing IPO market, Alto Neuroscience is among the brave few to have listed in 2024, raising $129 million at the high end of its anticipated share price range.
Granted, Alto’s strapline - “AI-powered precision medicine for the brain” – also capitalises on another buzzy field. It’s hoping to revive older drugs using more accurate diagnoses. Like any biotech raising money these days, Alto’s move comes on the back of positive data: its ALTO-300 program in December 2023 showed greater benefits as an adjunctive therapy among patients selected using an EEG biomarker than those without. The company isn’t revealing the compound, but attracted a $45 million Series C in November from investors including Eli Lilly.
Precision medicine remains a novelty in neurosciences. Yet new sequencing and sensor tools, and more powerful analytics, are now helping scientists’ probe the brain’s complex workings in more detail. In early 2024, FDA cleared an AI-powered clinical test for Alzheimer’s, BrainSee, which uses brain imaging and cognitive assessments to predict patients’ probability of progressing from mild cognitive impairment to dementia.
Alto Neuroscience is among the brave few to have listed in 2024, raising $129 million at the high end of its anticipated share price range.
Genetic studies are uncovering novel targets, too. Denali Therapeutics and Biogen’s Phase 3 Parkinson’s candidate inhibits the LRRK2 (leucine-rich repeat kinase 2) mutation, found to account for 5% of familial Parkinson’s disease. Alector has a Phase 2b Alzheimer’s candidate (with AbbVie) targeting TREM2, a genetic risk factor for sporadic disease, and a Phase 3 dementia program (with GSK) targeting progranulin, also linked genetically to neurodegenerative disease.
Other potential culprit genes for Alzheimer’s include APOE4. Lexeo Therapeutics is trying to counter the increased risk in patients harbouring APOE4 using a gene therapy that delivers a protective APOE2 gene. Its candidate is in Phase 1 / 2 trials to slow or halt Alzheimer’s disease progression in patients harbouring APOE4. The advancing field of gene therapy offers an important new delivery modality for brain disorder therapies.
“The genetic medicine movement in dementia is starting,” says Stifel’s Matteis. “But it’s early days.” The same is true of the broader neuroscience renaissance. As for its chance of catching up with obesity: not to be dismissed outright. Novo is testing GLP-1 agonist semaglutide (the active ingredient of weight loss drug Wegovy) in thousands of Alzheimer’s patients, on the hypothesis that faulty insulin signalling may play a causal role in dementia. If that is proven – study completion is due in 2026 - we’ll need a new word for “mega-blockbuster”.
“The genetic medicine movement in dementia is starting - but it’s early days.”
