Shining a Light on Overlooked and Underfollowed Biotechs: George
Source: George S. Mack of The Life Sciences Report
George Zavoico Prospecting for hidden biotech gems makes sense,
says H.C. Wainwright & Co. Managing Director George Zavoico,
who recently joined the firm's healthcare equity research team. The
digging can be hard, but the rewards of successful diligence are
huge. In this interview with The Life Sciences Report, Zavoico
takes readers on a discovery tour that follows clinical trial data
to new ideas that could bring windfalls to portfolios down the
The Life Sciences Report: What theme do you see working for
investors in 2014?
TLSR: Could you talk about Prana Biotechnology Ltd. (PBT:ASX),
which you've just initiated on?
GZ: Certainly. Prana has a compound called PBT2 in clinical trials.
On Feb. 18, the company announced results of its phase 2a trial in
Huntington's disease (HD). The primary endpoint in this randomized,
double-blind study was the safety and tolerability of PBT2 in
patients with HD. The exact primary endpoint was the frequency of
adverse events over 26 weeks, and it turned out that the compound
met that endpoint. This was not surprising, because the drug had
been safely administered to Alzheimer's disease (AD) patients in a
previous phase 2a trial.
Here's where things get interesting. I cautioned investors not to
overinterpret and expect statistically significant data on efficacy
from phase 2 trials at the start of this interview. This trial,
called Reach2HD, was first and foremost a phase 2a safety trial,
since PBT2 had never before been given to HD patients. A panel of
secondary endpoints—a long list actually—were examined with no
expectation of finding statistically significant efficacy results.
Recall what I said earlier about looking for trends, not
statistical significance. Prana was looking for trends in cognitive
function that could then be fashioned into a confirmatory phase 2b
trial that would increase the likelihood of showing a clinically
significant benefit—a meaningful improvement in cognitive
A surprising thing was discovered in this phase 2a trial. One of
the cognitive measures, specifically the Trail Making Test Part B,
demonstrated a statistically significant improvement in performance
versus placebo at both 12 and 26 weeks. This test is an assessment
of executive function—a patient's capacity to plan and organize
things and to multitask, which is weakened early on in both HD and
AD. The same cognitive function showed a statistically significant
improvement with PBT2 in an earlier, phase 2a AD trial, and it is
also a secondary endpoint in an ongoing AD trial that's going to
read out before the end of March, according to the company's
guidance. If this same secondary endpoint is met in the phase 2b
trial, that would be confidence building, to say the least.
TLSR: The results of the high dose of 250 mg versus the low dose of
100 mg are delineated in the phase 2a PBT2 trail. Is the efficacy
of the high-dose arm strong compared to the low-dose arm?
GZ: That's right. Also, in that regard, a very small substudy was
performed, in which the brains of four patients in both PBT2 trial
arms were imaged. Just as in Alzheimer's disease, the brain shrinks
in Huntington's disease. There was some evidence that brain atrophy
was reduced in the HD patients taking PBT2. Understand that this
was a trend toward conservation of brain volume with PBT2, and was
not statistically significant because of the small patient
population. But it was an exciting result, nevertheless.
TLSR: What is it about PBT2 that makes it potentially efficacious
in Alzheimer's and Huntington's diseases?
GZ: The common pathogenesis of these diseases is protein
misfolding. The misfolding is facilitated and enhanced by
metals—zinc and copper, in particular. The physiologic mechanisms
that remove zinc and copper, which are released and exist very
transiently in the synapse during neurotransmission, just don't
work as well as we age. In younger people, the metals are
immediately bound and transported back to their intracellular
storage sites. If they stay longer in the synapse—that space
between nerve cells—they can interact with those proteins and
aggregate. As disease progresses, these metal-binding proteins, or
metalloproteins, form plaques, which cause dysfunction in
neurotransmission and ultimately an inflammatory response that
kills the affected and surrounding neurons. That's when patients
begin to get overt symptoms.
In Alzheimer's and Huntington's diseases, the misfolded proteins
are beta-amyloid and mutant huntingtin protein, respectively. PBT2
has a chaperone-type activity that appears to strip zinc and copper
from these metalloproteins, then transports them across the
neuronal cell membrane and delivers them to intracellular proteins,
where the metals are normally stored. In animal models, PBT2 has
been shown to reduce the amyloid burden in the brain, meaning that
the amount of amyloid plaques is reduced. This is the primary
endpoint in the ongoing Alzheimer's disease trial, called IMAGINE,
that is expected to read out before the end of March.
Here's where it may get very exciting. If PBT2 reduces the amyloid
burden in Alzheimer's disease patients after a year of treatment,
and improves cognitive function, then it will be the only drug
candidate to have shown this. In our view, the risk-reward ratio
for PBT2 is tremendous.
Let me just caution readers that PBT2 may also fail to show a
reduction in amyloid burden, in which case we expect Prana's stock
to take a big hit. But having reviewed the preclinical and early
clinical results to date, we think this trial has a better chance
of succeeding than failing.