Big Role for a Small Protein
Alzheimer’s disease has become a growing scourge for the elderly, slowly robbing them of their memories and the very essence of who they are. More than 5 million Americans now live with the disease and one in three senior citizens dies with Alzheimer’s or some other form of dementia.
The disease is also proving a growing drain on the US economy. Last year, an estimated 15.4 million caregivers, mainly relatives of patients, provided more than 17 billion hours of unpaid care, according to data from the Alzheimer’s Foundation. If it had been compensated, that care would have been valued at $216 billion.
This year, the disease is expected to cost the economy $203 billion. That cost could ultimately rise to $1.2 trillion by 2050, as the number of people over age 65 continues to rise along with the aging Baby Boomers, pushing the number of Alzheimer’s patients to more than 7 million by that year.
The situation is even grimmer when considered from a global perspective, because an estimated 36 million patients worldwide suffered from the disease in 2010. By 2050, more than 115 million patients will get the disease and their care will eat up an estimated 4 percent of global gross domestic product annually.
Meanwhile, the developed world continues getting older and improving standards of living are lengthening lives in emerging markets. Addressing the challenge of Alzheimer’s is increasingly critical.
Grifols SA (NSDQ: GRFS), a Spanish company, has a promising Alzheimer’s treatment in the works.
The company has structured its business into three divisions. Its diagnostics division offers equipment and chemicals used in blood typing, test systems used to measure and monitor blood clotting times, analyzers to measure immune system activity and products and services for blood banks.
The company’s hospital division supplies nutritional products and equipment used to care for patients receiving nutritional support through feeding tubes, medical devices used in a wide range of surgical procedures, intravenous fluid solutions, and a wide range of hospital logistics systems.
We’re most interested in Grifols’ biosciences division, which also happens to account for more than 90 percent of its revenue. Housed under that rather generic label is the company’s hemotherapy operation, otherwise known as treatments for disease using human blood or its components.
Grifols collects blood from donor centers, tests it for disease and then puts it through a sophisticated filtration system that removes virtually all pathogens, rendering it safe for use in other patients. It then puts the blood through a series of mechanical and chemical processes that separate out a wide variety of proteins and cells, such as platelets. The latter are used to treat an array of diseases, such as bleeding conditions, pulmonary diseases and immune deficiencies.
The company’s most in-demand products include intravenous immune globulin (IVIG), used to treat chronic inflammatory demyelinating polyneuropathy, a neurological condition causing progressive nerve damage that results in pain and weakness in a patient’s extremities. Grifols currently offers the only IVIG treatment for the disease, known as Gamunex, in the US under orphan drug status.
The company also makes alpha1proteimase inhibitors, used to treat patients with a genetic pulmonary disorder known as alpha1-antitypsin deficiency (AAT). Patients with AAT deficiency suffer from breathing difficulties, as enzymes naturally produced by their bodies attack healthy tissues, especially lung tissue. Left untreated, patients with AAT deficiency would eventually suffocate after their lungs became too severely damaged.
Alpa1-proteimase inhibitors deactivate the enzyme responsible for that damage, known as neutrophil elastase.
Grifols also produces human clotting factors VIII and IX, used to treat patients with hemophilia A and B, as well as vaccines for rabies, tetanus, hepatitis A&B, and chickenpox.
Grifols has historically been a low beta stock, with revenue and earnings that have grown in the mid-single digits. However, the company’s placid growth rate could take off over the next few years.
Grifols has long offered human albumin, a blood protein that makes up about 55 percent of all plasma proteins and has been used to treat shock and trauma victims since the 1970s.
As a patient suffers extreme blood loss, the body can’t produce sufficient blood proteins that essentially maintain the blood’s thickness. As a result, blood can literally ooze through arteries and vessels and exacerbate the patient’s condition. By receiving albumin treatments, the blood’s correct viscosity can be maintained, keeping it where it belongs.
Research has revealed that albumin might have another therapeutic use. Initial studies have shown that the simple blood protein likely slows the progression of Alzheimer’s disease.
A limited study conducted in 2009 involving three hospitals in Spain, two in the US and 42 patients showed that albumin, administered in conjunction with IVIG and hemapheresis treatment, stabilized or halted the progression of Alzheimer’s. Grifols is in the process of enrolling 350 patients in an FDA Phase 3 clinical trial designed to evaluate the safety and efficacy of that treatment.
Initial data from the trial is expected next year and, assuming the study is successfully completed, the treatment could be on the market by mid-2015. But Grifols investors won’t have to wait that long to see the benefit of the new treatment.
Baxter International (NYSE: BAX) is working on a similar product known as Gammagard, now in its own phase 3 trial, with data from that study expected later this year. The two products are sufficiently different that they would both likely receive FDA approval if proven safe and effective. However, they’re also similar enough that if the data on Baxter’s drug is promising, Grifols’ probably would be as well.
Consequently, Grifols would get a pop off positive Baxter data, while being better positioned to meet potential demand for a new Alzheimer’s drug down the line. Due to production issues, Baxter has been suffering from supply constraints on a number of its IVIG products for about a year, essentially rationing and backordering products.
Grifols, on the other hand, has more than sufficient production capacity to meet future demand, thanks to a number of acquisitions over the past few years. The upshot: Grifols will likely realize greater benefit from the new treatment than any of its leading competitors.
The disease is also proving a growing drain on the US economy. Last year, an estimated 15.4 million caregivers, mainly relatives of patients, provided more than 17 billion hours of unpaid care, according to data from the Alzheimer’s Foundation. If it had been compensated, that care would have been valued at $216 billion.
This year, the disease is expected to cost the economy $203 billion. That cost could ultimately rise to $1.2 trillion by 2050, as the number of people over age 65 continues to rise along with the aging Baby Boomers, pushing the number of Alzheimer’s patients to more than 7 million by that year.
The situation is even grimmer when considered from a global perspective, because an estimated 36 million patients worldwide suffered from the disease in 2010. By 2050, more than 115 million patients will get the disease and their care will eat up an estimated 4 percent of global gross domestic product annually.
Meanwhile, the developed world continues getting older and improving standards of living are lengthening lives in emerging markets. Addressing the challenge of Alzheimer’s is increasingly critical.
Grifols SA (NSDQ: GRFS), a Spanish company, has a promising Alzheimer’s treatment in the works.
The company has structured its business into three divisions. Its diagnostics division offers equipment and chemicals used in blood typing, test systems used to measure and monitor blood clotting times, analyzers to measure immune system activity and products and services for blood banks.
The company’s hospital division supplies nutritional products and equipment used to care for patients receiving nutritional support through feeding tubes, medical devices used in a wide range of surgical procedures, intravenous fluid solutions, and a wide range of hospital logistics systems.
We’re most interested in Grifols’ biosciences division, which also happens to account for more than 90 percent of its revenue. Housed under that rather generic label is the company’s hemotherapy operation, otherwise known as treatments for disease using human blood or its components.
Grifols collects blood from donor centers, tests it for disease and then puts it through a sophisticated filtration system that removes virtually all pathogens, rendering it safe for use in other patients. It then puts the blood through a series of mechanical and chemical processes that separate out a wide variety of proteins and cells, such as platelets. The latter are used to treat an array of diseases, such as bleeding conditions, pulmonary diseases and immune deficiencies.
The company’s most in-demand products include intravenous immune globulin (IVIG), used to treat chronic inflammatory demyelinating polyneuropathy, a neurological condition causing progressive nerve damage that results in pain and weakness in a patient’s extremities. Grifols currently offers the only IVIG treatment for the disease, known as Gamunex, in the US under orphan drug status.
The company also makes alpha1proteimase inhibitors, used to treat patients with a genetic pulmonary disorder known as alpha1-antitypsin deficiency (AAT). Patients with AAT deficiency suffer from breathing difficulties, as enzymes naturally produced by their bodies attack healthy tissues, especially lung tissue. Left untreated, patients with AAT deficiency would eventually suffocate after their lungs became too severely damaged.
Alpa1-proteimase inhibitors deactivate the enzyme responsible for that damage, known as neutrophil elastase.
Grifols also produces human clotting factors VIII and IX, used to treat patients with hemophilia A and B, as well as vaccines for rabies, tetanus, hepatitis A&B, and chickenpox.
Grifols has historically been a low beta stock, with revenue and earnings that have grown in the mid-single digits. However, the company’s placid growth rate could take off over the next few years.
Grifols has long offered human albumin, a blood protein that makes up about 55 percent of all plasma proteins and has been used to treat shock and trauma victims since the 1970s.
As a patient suffers extreme blood loss, the body can’t produce sufficient blood proteins that essentially maintain the blood’s thickness. As a result, blood can literally ooze through arteries and vessels and exacerbate the patient’s condition. By receiving albumin treatments, the blood’s correct viscosity can be maintained, keeping it where it belongs.
Research has revealed that albumin might have another therapeutic use. Initial studies have shown that the simple blood protein likely slows the progression of Alzheimer’s disease.
A limited study conducted in 2009 involving three hospitals in Spain, two in the US and 42 patients showed that albumin, administered in conjunction with IVIG and hemapheresis treatment, stabilized or halted the progression of Alzheimer’s. Grifols is in the process of enrolling 350 patients in an FDA Phase 3 clinical trial designed to evaluate the safety and efficacy of that treatment.
Initial data from the trial is expected next year and, assuming the study is successfully completed, the treatment could be on the market by mid-2015. But Grifols investors won’t have to wait that long to see the benefit of the new treatment.
Baxter International (NYSE: BAX) is working on a similar product known as Gammagard, now in its own phase 3 trial, with data from that study expected later this year. The two products are sufficiently different that they would both likely receive FDA approval if proven safe and effective. However, they’re also similar enough that if the data on Baxter’s drug is promising, Grifols’ probably would be as well.
Consequently, Grifols would get a pop off positive Baxter data, while being better positioned to meet potential demand for a new Alzheimer’s drug down the line. Due to production issues, Baxter has been suffering from supply constraints on a number of its IVIG products for about a year, essentially rationing and backordering products.
Grifols, on the other hand, has more than sufficient production capacity to meet future demand, thanks to a number of acquisitions over the past few years. The upshot: Grifols will likely realize greater benefit from the new treatment than any of its leading competitors.