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

Stuart Roberts

Pitt Street Research and NDF Research

Often in Life Sciences people speak of the 'Holy Grail' as something that everyone in a particular field is looking for and will be very pleased when it is found. It's an unusual term to use given that most people in Life Sciences either aren't Christian or aren't in touch with their Chistian heritage. I'll use it anyway to decribe what I think is the biggest opportunity in biotech today. The Holy Grail of this industry is a new drug for the treatment of Alzheimer's disease, of which there has been none since 2003. The latest report out of NDF Research deals with a company that I think has a chance at finding the Grail - Actinogen Medical, whose Xanamem drug is now in a Phase 2 study that reads out data next year.

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 reason why Actinogen may be able to find the Grail is that Xanamem targets cortisol rather than the amyloid plaques that a lot of failed drug candidates have gone after. The Cortisol Hypothesis in Alzhemer's has strong published scientific support indicating a promising chance of success. We look at length at the Cortisol Hypothesis and at Xanamem in our research note. Actinogen’s Phase 2 trial of Xanamem, entitled XanADu, is already half recruited and is expected to complete next year. With XanADu firmly in train to test the Cortisol Hypothesis, we were able to reasonably value Actinogen at 10 cents per share base case and 26 cents per share optimistic case using a probability-weighted DCF approach. 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.


You can download a copy of NDF Research's initiation report by clicking here or visiting Note - the usual disclaimers apply - click here.

1 stock mentioned

Stuart Roberts
Founder and Senior Analyst
Pitt Street Research and NDF Research

I am an equity research professional who worked in stockbroking from 2001 to 2015. After 15 months doing investor relations I returned to equity research with the founding of NDF Research. With Marc Kennis I founded Pitt Street Research in July 2018.

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