Alzheimer’s Stocks Are a Stealth Opportunity

by James Brumley | December 10, 2013 9:50 am

It’s admittedly not the highest-profile illness being targeted by the biopharma industry’s top developers. Cancer gets that dubious honor. Infectious-disease treatments get the second-biggest share of the pharmaceutical sector’s R&D dollars, followed by autoimmune diseases, then heart disease. Meanwhile, Alzheimer’s and dementia barely register as worthy (read “well-funded”) pursuit for the industry. Alzheimer’s stocks get similarly-lackluster attention from investors.

Alzheimer's Stocks
Source: Flickr[1]

Just because Alzheimer’s drugs are a priority for the industry at large, however, doesn’t mean there’s no opportunity in the few Alzheimer’s stocks out there. Indeed, in some ways, the fact that so few researchers are taking aim at the illness means there’s outsized — and relatively competition-free –revenue potential for a viable drug in the space. Throw in the fact that the dementia and Alzheimer’s epidemic is expected to explode within the foreseeable future, and what you have something more than investment-worthy.

The $64,000 question is, which stocks are the best Alzheimer’s stocks?

The Alzheimer’s Market Outlook

It’s more than a little ironic when you think about it. Our current healthcare capabilities allow us to live longer, but now that we’re living longer, we’re more apt to develop dementia, or Alzheimer’s. The G8 Dementia Summit being held in London this week concluded the number of worldwide cases of Alzheimer’s could reach 135 million by 2050, up from the current 44 million. For perspective, 12.7 million people (worldwide) are diagnosed with cancer every year, and 7.6 million people die from cancer.

So why isn’t dementia given the same attention and effort cancer is? It’s not that there’s no money in it. In 2012, we spent $10.2 billion – globally — on treatments for Alzheimer’s. No, that’s not a lot, compared to the $110 billion we’re apt to spend on cancer therapies in 2013. Bear in mind, however, that we spent that $10 billion on Alzheimer’s drugs we knew weren’t likely to help much, if at all.

See (and this may be the real reason an Alzheimer’s/dementia drug isn’t a priority for the pharmaceutical industry), despite studying it for years, medical researchers still aren’t entirely sure what causes the disease. It was only a few years ago that scientists largely concluded Alzheimer’s was the result amyloid plaque building up in the brain, so much that it breaks the needed connection between nerve cells. Since then, some have begun to think it’s heavy exposure to metals like aluminum or iron that cause the disease. Still others think Alzheimer’s is simply caused by oxidative stress.

Meet the Next Generation of Alzheimer’s Stocks

Fortunately for drug developers, they don’t have to know exactly how their drug works to win the FDA’s approval. They only have to prove that it is safe and more effective that current drug choices. Those choices are Aricept, from Pfizer (PFE[2]), Namenda from Forest Laboratories (FRX[3]), and Exelon, from Novartis (NVS[4]). All three drugs are each well over a decade old though, and not exactly thrilling choices … but they’re the only options out there.

But they won’t be for long…

Being well known isn’t a key to lasting success in this arena, though. In fact, there are three Alzheimer’s stocks worth a much closer look because of their underlying companies’ compelling new research, even if an actual marketable drug is years away:

Bottom Line

It’s worth noting that Alzheimer’s drug solanezumab, from Eli Lilly (LLY[8]), already failed, and it was focused on the reduction of the beta-amyloid plaques found in many Alzheimer’s patients. Meanwhile, bapineuzumab, co-developed by Pfizer and Johnson & Johnson as a means to reduce beta amyloid plaque, was discontinued due to ineffectiveness.

Point being, the mere “amyloid plaque reduction” route may well be a dead end. This opens the door to other treatment possibilities, and means non-traditional Alzheimer’s stocks represent legitimate opportunities.

Whatever the true cause and effect of Alzheimer’s is, Aricept, Namenda, and Exelon generated $6 billion in sales, last year. And that’s with a mediocre benefit (at best) from these treatments, and a questionable benefit in too many cases. Were a truly effective drug brought to market, some experts believe the size of the Alzheimer’s market could be worth $20 billion. It’s only a matter of time before some young, enterprising organization does exactly that.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

  1. Flickr:
  2. PFE:
  3. FRX:
  4. NVS:
  5. PRAN:
  6. SGMO:
  7. JNJ:
  8. LLY:

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