Actinogen Medical (ASX: ACW) – Breaking the long dry spell in Alzheimer’s treatment

NDF Research provides independent research coverage of ASX-listed Life Science companies, selected highlights of their research on Actinogen Medical are provided below:

Breaking the long dry spell in Alzheimer’s treatment.

20 years ago, a diagnosis of cancer was often considered a death sentence; today the majority of patients survive for more than five years through significant advances in diagnosis and treatment. 25 years ago, the first treatment for Alzheimer’s disease was brought to market; yet today the prognosis for Alzheimer’s disease has changed very little. The few drugs that are available provide only marginal benefit and the need for new effective therapies has never been more urgent. In the US alone, there are over 5 million Alzheimer’s sufferers, and in Australia, it’s the leading cause of death for women and second only to cardiovascular disease for men. These current grim statistics are due in large part to the few approved treatments providing only symptomatic relief, and that there has not been a new FDA-approved Alzheimer’s treatment since 2003.

Age is the biggest risk factor for Alzheimer’s and the aging population is resulting in more and more of our loved ones being diagnosed with the disease each year. The challenge is to develop new treatments that result in a shift in Alzheimer’s disease prognosis comparable to the substantial progress seen with cancer. The company that successfully brings a drug to market will have access to a global market in the tens of billions of dollars and the potential to create the next Alzheimer’s blockbuster.

Actinogen Medical aspires to be part of that shift. The company’s unique focus is on the development of Xanamem, a drug that targets cortisol (rather than amyloid plaques). This target has strong published scientific support indicating a promising chance of success.

Actinogen’s Phase 2 trial of Xanamem, entitled XanADu, is expected to complete in 2019. On this basis, we value the company at 10 cents per share base case and 26 cents per share optimistic case. Our target price of 18 cents per share sits at the midpoint of our valuation range. We see Actinogen being re-rated by the progress of the XanADu trial, particularly with an interim analysis due in May/June 2018 prior to the full results in the second quarter of 2019.

Rating      Risk                     Current price   Target price

Buy            Speculative            $0.044                   $0.18

Stock details

Daily Turnover: ~A$41,000

Market Cap: A$32.9m

Shares Issued: 747.2m

52-Week High: $0.09

52-Week Low: $0.039


Introducing Actinogen, ASX: ACW

Actinogen, with Xanamem, may have the first new Alzheimer’s drug since 2003. In this report we present the specifics behind why Xanamem, now in Phase 2, has the potential to become a successful treatment for mild Alzheimer’s disease. Such a claim might be considered bold due to Alzheimer’s clinical trials eliminating hundreds of drug candidates since the last approved drug, Namenda, came on the market in 2003. Given the urgent need for new Alzheimer’s drugs, if Xanamem yields favourable data in its Phase 2 – and top-line results are expected in the first half of 2019 – the Sydney-based Actinogen will be worth significantly more than their current US$25m market capitalisation.


Alzheimer’s space will have become used to hearing about drugs in research that target amyloid beta, or tau, or 5-HT6, none of which, to date, have proven successful. Xanamem can potentially treat cognitive impairment in Alzheimer’s and other neurodegenerative diseases by reducing excess cortisol production in the brain. It does this by targeting an enzyme called 11β-HSD1 and this mode of action, as a treatment pathway for Alzheimer’s, is new.

To provide clinical proof of this mode of action – coined the Cortisol Hypothesis – Actinogen commenced a Phase 2 study of Xanamem called ‘XanADu’ in mild Alzheimer’s in mid-2017. The company expects to complete recruitment for this study by the end of 2018 and read out top-line data from this study in the first half of 2019.

What is 11β-HSD1 and why is it considered an important drug target in Alzheimer’s? The enzyme 11β- hydroxysteroid dehydrogenase type 1, or 11β-HSD1 for short, converts cortisone to cortisol inside cells. Cortisol is a steroid hormone vital among other things for the body’s production of energy. Excess cortisol has historically been associated with a range of chronic health conditions1, and a large body of research has now established a link between elevated brain levels of cortisol and the cognitive decline seen in Alzheimer’s disease. Moreover, it has been shown in vivo that this decline improves once excess cortisol production is reduced. Research on cortisol, 11β-HSD1, and Alzheimer’s was conducted at the University of Edinburgh, where a drug discovery effort ultimately resulted in Xanamem. In 2014, Actinogen acquired the company that was developing Xanamem.

What is the evidence to date of Xanamem’s effectiveness in Alzheimer’s? The Edinburgh scientists, which we call the Edinburgh Group, gathered and published considerable in vivo evidence on the effectiveness of their 11β- HSD1 inhibitors in Alzheimer’s disease, which we evaluate in this report. In one important 2015 paper they noted a marked increase in cognition and reduction in amyloid plaques in an animal model of Alzheimer’s when 11β- HSD1 inhibitors are used. Actinogen confirmed, in Phase 1 studies in healthy volunteers, high bioavailability of Xanamem at therapeutic levels leading to concentrations in the brain adequate to inhibit the 11β-HSD1 enzyme and reduce the production of cortisol. The company has now progressed into Phase 2, with its XanADu clinical trial.

What is XanADu and what are Xanamem’s prospects in that study? XanADu is a 174-patient double blind, placebo-controlled Phase 2 study of Xanamem in mild Alzheimer’s disease in which the patients are randomised 1:1 to either 10 mg daily Xanamem or placebo for twelve weeks. The study is being conducted in 20 sites in the US, the UK and Australia. The co-primary endpoints are improvements in two standard measures of Alzheimer’s severity called ‘ADAS-Cog 14’ and ‘ADCOMS’. In addition, numerous secondary outcome measures are being used, increasing the likelihood of clinical success. A 2013 guidance document released by the FDA on Alzheimer’s drugs outlined that for mild Alzheimer’s disease, changes in cognition are considered clinically relevant even without any associated functional changes; this raises the chances that Actinogen’s drug can show meaningful therapeutic benefit. The FDA released an update to this guidance document in February 2018, further consolidating the adaptable approaches to approving Alzheimer’s treatments that are being established by global regulatory authorities.

If Actinogen is so good, why is it only capitalised at A$32.9m/US$25.2m? It’s fair to say that Alzheimer’s has been something of a ‘drug developer’s graveyard’ over the last decade and a half, which has made investors reluctant to give too high a market capitalisation to Actinogen at this stage of Xanamem’s development. That said, the ‘Cortisol Hypothesis’ is fresh in the Alzheimer’s drug development field, when compared to the historical approach of targeting the amyloid beta and tau proteins. The Cortisol Hypothesis has significant patient population data behind it, most notably with the recent AIBL study which verified the hypothesis in >400 patients over six years. Actinogen can re-rate markedly should an interim analysis of the XanADu study in mid-2018 recommend that the trial proceed as planned.

Ten reasons to look at Actinogen

1) Actinogen is working on a differentiated mechanism of action in Alzheimer’s and dementia. Whilst most drug development efforts in Alzheimer’s have historically focused on targeting amyloid beta and tau, the approach of inhibiting cortisol production in the brain has yet to be explored as deeply. Numerous independent findings in recent years, including a number derived from clinical evidence, suggests the Cortisol Hypothesis has merit.

2) The data on cortisol inhibition and on Xanamem is exciting, with many published papers, reporting both human and animal data, that show that it is possible to improve cognition via inhibiting cortisol in the brain.

3) The commercial potential of a new Alzheimer’s drug is immense. Whilst numerous drugs in development have failed over the last decade, the demand for new Alzheimer’s drugs continues to grow as populations age. In America alone an estimated 5.5 million people have Alzheimer’s disease. Any drug that is successful in clinical trials is likely to be a blockbuster.

4) The regulatory environment for new Alzheimer’s drugs is favourable. A 2013 guidance from the FDA means that drugs developed for earlier-stage Alzheimer’s patients only, must improve cognition rather than function where improvement is difficult to measure. This notionally makes it easier for drugs like Xanamem, which is being studied in mild Alzheimer’s, to ultimately gain approval.

5) Xanamem has a good safety profile, with the drug having been well-tolerated in over 100 clinical trial subjects and patients in Single and Multiple Ascending Dose studies, as well as in the current XanADu Phase 2 trial.

6) Xanamem is now recruiting in Phase 2. The initiation of the XanADu study in June 20175 puts Actinogen on track to potentially complete recruitment for this Phase 2 trial before the end of 2018 and read out top-line results in 2019.

7) Actinogen is funded for its next stage of development. A late 2017 raising of A$5.3m at 4 cents per share provided the necessary capital to finish the XanADu study, which we believe can lead to a significant deal with a major pharmaceutical partner in the event of favourable data.

8) Xanamem is a ‘pipeline in a product’. The evidence to date has suggested that Xanamem could have utility across a range of conditions characterised by raised cortisol and cognitive decline. Actinogen intends to prioritise Diabetes-Associated Cognitive Impairment (DACI) for its second indication. Post-traumatic stress disorder (PTSD) and post-myocardial infarction (post-MI), among others, are also under consideration.

9) Actinogen has an accomplished management team. CEO Dr Bill Ketelbey has many years of experience in medical affairs and drug development with Big Pharma and knows the Alzheimer’s space well, having been involved in the development of Aricept, the market leading Alzheimer’s treatment. Backing Ketelbey is a board with all the requisite knowledge and skills to build an early-stage Life Sciences company including recent appointees, Drs Geoff Brooke, one of Australia’s most credentialed biotechnology venture capitalists, and George Mostyn, whose >25 years’ experience in the biotechnology industry included being Senior Vice President of Development and Chief Medical Officer at Amgen.

10) Actinogen is undervalued on our numbers. We value Actinogen at 10 cents per share base case and 26 cents per share optimistic case. Our target price of 18 cents per share sits at the midpoint of our valuation range. We see a significant re-rating in Actinogen stock should the XanADu trial read out positive top-line results in 2019.

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