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Can This Biotech Puppy Run With the Big Dogs?

Cory Renauer, The Motley Fool

If you've never heard of Eidos Therapeutics (NASDAQ: EIDX) during its eight-month history as a public company, try not to beat yourself up about it. On an average week in 2018, at least one new biotech stock began trading on U.S. exchanges.

Staying on top of every new drugmaker takes a lot more time than you probably have. That said, Alnylam Pharmaceuticals (NASDAQ: ALNY) and Pfizer (NYSE: PFE) shareholders want to keep their eyes on young Eidos and its lead candidate. Here's why.

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Catching up fast

For at least a decade, Alnylam and Pfizer have been developing new treatments for a rare and often misdiagnosed cause of heart failure and nerve damage called transthyretin amyloidosis (ATTR). In June 2018, Eidos Therapeutics made its stock market debut shortly after beginning its first attempt to prevent cardiomyopathy caused by ATTR, or ATTR-CM, with its lead candidate, AG10. 

Following a successful readout from AG10's human proof-of-concept trial in November, the company quickly designed a 510-patient pivotal ATTR-CM study that's already started. The FDA appears willing to accept an early application from Eidos based on a 12-month goal and consider 30-month hospitalization rates from the same trial a post-marketing requirement.

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The future leader of the pack?

At 12 months, Eidos will measure how far patients can walk in six minutes compared to a placebo group, which is a little dicey because the company didn't report any six-minute walking distance info during AG10's first trial. The tablets showed such an impressive ability to hold ATTR together, though, that success at least seems possible. 

After taking AG10 for 28 days, 90% of the TTR in patient blood samples appeared stabilized, on average. Patients receiving the dose Eidos advanced to phase 3 averaged a 50% increase in circulating TTR, compared to a 7% decline among the placebo group. 

Boosting circulating TTR levels strongly suggests AG10 could make a huge difference for ATTR-CM patients, but it's too early to predict long-term outcomes. If AG10's 12-month walking distance result doesn't work out, its phase 3 trial includes a 30-month measurement of hospitalization rates that could allow it to enter the market later than hoped. 

What Eidos could do to Alnylam 

AG10's ability to stabilize TTR is important because vitamin A and thyroid hormones can't get around without it. Among ATTR patients, though, the protein falls apart easily and gets jammed up in different tissues and organs.

Alnylam's recently launched intravenous infusion, Onpattro, works by limiting production of TTR in the liver. Limiting TTR production is one way to stop fragments from building up and causing damage, but it probably isn't as safe as helping the protein stay together to do its job.

Right now, Onpattro is limited to patients with nerve damage caused by a bad TTR gene that they inherited, and not the larger indication Eidos is aiming for. While Onpattro will probably remain important for ATTR patients born with their condition, blockbuster sales from the wider population just aren't going to happen if AG10 or a drug closer to the finish line from Pfizer continues to impress.  

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What Eidos could do to Pfizer

Around 4 million Americans live with a form of heart failure defined by a left ventricle that pumps at least half as much blood as it should. Among this group, an estimated 14% are thought to have the wild-type version of ATTR-CM, the risk for which rises with age. 

With an estimated 440,000 ATTR-CM patients in the U.S. alone, an easy-to-swallow pill that can prevent TTR from falling apart could be worth several billion in annual sales. Pfizer launched one called tafamidis for nerve damage caused by ATTR in the EU years ago, but it hasn't performed well in the commercial setting.

Tafamidis could get a second chance with a much larger population before the end of the year. The FDA's reviewing an application based on results that show a clear benefit for ATTR-CM patients. During a 30-month outcome study, those receiving tafamidis were 32% less likely to end up in the hospital for a heart-related condition than the placebo group.

Although tafamidis has potential blockbuster written all over it, there's a chance AG10 will unseat Pfizer's drug from the lead position in a few short years.

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The numbers to beat

Tafamidis has a shot at blockbuster sales because it reduced the risk of a cardiovascular-related hospitalization by 32% at a 30-month follow-up. To convince regulators, though, Eidos just needs to prove it can prevent patients from losing mobility after 12 months. The average patient who took tafamidis lost around 27 meters on the six-minute test after 12 months of treatment, compared with a decline of about 59 meters among the placebo group.

A popular ATTR-CM treatment could eventually generate a few billion annually. Eidos Therapeutics might not get big enough to chase down Pfizer on its own, but there are some acquisitive companies out there with enough resources to compete with the pharma giant. Eidos sports a $620 million market cap at recent prices that could swell to several times its size if AG10 continues to impress.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alnylam Pharmaceuticals. The Motley Fool has a disclosure policy.