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Pain Therapeutics' Shares Rally on Alzheimer's Study Grant

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Pain Therapeutics, Inc. announced that the National Institutes of Health (NIH) has awarded a clinical research grant of $3.2 million to support a mid-stage study on its lead pipeline candidate, PTI-125, a small molecule being investigated for treating Alzheimer’s disease. The company plans to use the grant to fund a phase II study to evaluate PTI-125.

Shares of the company rallied 76.6% on Aug 15 following the news. However, the stock’s movement has been disappointing so far this year. Pain Therapeutics’ shares have declined 50.8% against the industry’s increase of 0.2% in the said period.

The grant from NIH is a major boost for the small biopharmaceutical company, which expects to initiate the phase II study of PTI-125 in the fourth quarter of 2018. The company has another research grant application under review with NIH to support PTI-125.

Alzheimer’s disease is a brain disorder, which progresses with time and slowly destroys memory and thinking skills, affecting day-to-day activities. Some drugs are approved to treat symptoms or dementia associated with Alzheimer’s but nothing is approved to treat Alzheimer’s disease. The estimated value of the U.S. market for the disease is around $30 billion. Successful development of PTI-125 will be beneficial for the company as Alzheimer’s is a severely under-treated segment.

We note that Alzheimer’s is a difficult-to-treat disease as evident from the fact that several companies had previously failed to successfully completed clinical studies evaluating treatment for the disease. We remind investors that Takeda and Merck (MRK - Free Report) discontinued development of pioglitazone and verubecestat, respectively, early this year. In June, development of Lilly and AstraZeneca’s Alzheimer’s candidate, lanabecestat, was discontinued. These failures are among the many that occurred this year.

However, there have been a few positive developments related to the treatment of Alzheimer’s disease. In July, Biogen (BIIB - Free Report) announced that treatment of Alzheimer’s disease patients with its pipeline candidate, BAN2401, has slowed the progression of the disease. Moreover, Roche (RHHBY - Free Report) is developing two candidates, grenezumab and gantenerumab, in several late-stage clinical studies for the treatment of the disease. In previously completed phase III clinical studies, gantenerumab showed efficacy in removing plaques that were considered toxic to the brain.

We remind investors that Pain Therapeutics received a setback last week when the FDA issued a complete response letter to its new drug application seeking approval for its pain medication candidate, Remoxy.

The company is planning to align its resources to support development of treatment for Alzheimer’s disease as part of its strategic reorganization. A detailed plan will be made available later in the year.

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