Israeli pharmaceutical start-up Alcobra Pharmaceuticals is listed on the NASDAQ electronic stock exchange under the ticker ADHD, the disease it treats with a non-stimulant compound that is expected to come to the market in 2015.
In an interview with Israeli business daily Globes, CEO Dr. Yaron Daniely explained how the company was originally created in 2008 to develop the molecule metadoxine to help inhibit the effects of alcohol on the brain.
“The goal was to create a pill that would quickly reduce blood alcohol levels, so that people would be able to drive safely,” explains Daniely. “It turned out the drug had no significant impact on removing alcohol from the blood, but it had a very significant impact on cognitive ability. In driving, memory, and attention tests that were conducted, it was as though those people were not drunk, despite the fact that, in terms of the amount of alcohol in their blood, it was not clear that they would be able to stand on their own two feet. So the idea to treat Attention Deficit Disorder came about.”
A pilot the company conducted in 2010 among 40 adults with ADHD showed “an immediate and significant improvement in attention tests. As a result of this, the company reinvented itself,” Daniely said, which is when he was named by researchers Dr. Dalia Megiddo and Udi Gilboa to be its new CEO.
Bilingual with a Ph.D. from the Sackler Institute of Graduate Biomedical Sciences at the New York University School of Medicine, an NIH Visiting Fellow in Cell Biology, a Postdoctoral Fellow in the Department of Molecular Cell Biology at The Weizmann Institute for Science, in Rehovot, and an MBA from the Technion – Israel Institute of Technology, Daniely also was VP Business Development at Gamida Cell Ltd., managing its joint venture with Teva Pharmaceutical Industries Ltd.(NYSE: TEVA; TASE: TEVA) to develop a cancer drug.
The idea was to approach TEVA to fund the start-up, which it did with $5 million to fund its first tests. But with TEVA later in a management crisis, and its options to increase its position in Alcobra expired, the team sought an IPO on the NASDAQ, which has since net it some $60 million in proceeds and a market capitalization of $220 million, more than enough to fund its final tests and market launch.
Daniely said the chemical compound metadoxine has been approved for 40 years for the treatment of liver disease in third-world countries, including India, China, Russia, and Thailand. The company has registered a patent for the use of metadoxine for neurological conditions, through a timed-release of the substance, so its effect on the patient lasts a few hours.
Globes said that Alcobra has no labs, its raw materials are manufactured by a third party in Germany, and the pills themselves are manufactured in the US. The company believes that the drug combines the benefits of the two existing classes of ADHD drugs – the stimulants, such as Ritalin and Concerta, and the non-stimulant drugs, such as Strattera – and claims that it does not have their drawbacks.
According to the company, the results of the clinical trials showed that the drug is not addictive, worked faster and was twice as effective as the existing non-stimulant drugs, and had a similar anti-ADHD effect to that of the stimulants. It primarily affects cognitive ability, less so hyperactivity.
Daniely advised other Israeli start-ups to follow four lessons from Alcobra’s successful IPO. “The first element was quality, and a refusal to compromise,” he said. “Alcobra, from day one, tried to be different from other companies. We have an almost pedantic stubbornness not to do things too small or too short, but rather to do the things the way we would if we were a company in Silicon Valley. Therefore, our Phase II trial didn’t include 20 people over two weeks, instead, it included 120 people, with a placebo control, over the course of six weeks, using the exact same measures that all the ADHD drugs in the world are measured by. Many companies understand too late that they are conducting poorer trials without the appropriate controls.”
The second element was the company’s target market. “There’s nothing like ADHD,” he says. “First of all, people understand the market; there are drugs, it is known how much each company is selling and why, there are patients, there is a market that turns over $4 billion each year in the US. Also, people think they understand what ADHD is. It affects almost everyone, their kid, or their nephew.”
A third element is the pace of development: “With ADHD, unlike rare cancers, participants for clinical trials are incredibly easy to find. So our time to market and our ability to build our development process are such that almost every month we have good news for shareholders. The phase III trial will include 300 patients, in 20 medical centers, over the course of six months.”
The fourth element that helped secure funding was his native-English speaking ability, personal CV and track record and a decision to invite well-known professionals from the ADHD research community to be on their team, in this case, Prof. Lenard Adler, a researcher from NYU and an expert in ADHD drug development, who serves as head of the clinical committee that advises the company. “When someone like him sits next to you and says: ‘I conducted the trial and I stand behind the results,’ they can’t blow you off. Israeli entrepreneurs need to understand this and bring these people to their companies, so they can bridge the gap,” Daniely said.
While the company tried to get funding in Israel, where ADHD is less frequently diagnosed, its success in raising money on the NASDAQ has led many other young pharma companies to its doors, seeking advice. Its success has also led to new projects.
“Many things happened at the company, and our ability to implement plans grew. We had a tremendous opportunity to treat fragile X syndrome, which is associated with autism. It is a very common condition, which is very difficult for many who suffer from it, and there is no treatment. In a trial we conducted on animals with a kind of fragile X, we came up with outstanding results. It completely normalized learning, memory, social behavior, and communication. In parallel, the market in the US was still on fire, and said, ‘go, secure the investment, and bring in more cash,’” Daniely said.
The funds Alcobra raised guarantee that the company will have full funding until it is approved as a drug for adult ADHD, which, according to Daniely, is expected to reach market in late 2015, and for children soon afterwards. The money will also fund the fragile X trial.