Alcobra (NASDAQ: ADHD) raised $27.9 million in a secondary offering at $4 per share last week. The stock raced from $4.00 on Janurary 8 to $6.98 on Janurary 16. This Israel-based pharmaceutical company intends to initiate a second Phase III trial for its once-failed MDX in adult attention deficit hyperactivity disorder (ADHD).
ADHD is one of the most common mental disorders that develop in children and can continue into adulthood for some. The disease affects 8-10% of school-aged children and about 4-5% of the adult population.
Several drugs (e.g., Ritalin, Adderall, Vyvanse, Concerta, Strattera, Intuniv) have been approved for the treatment of ADHD. In the U.S., roughly 70% of children and 49% of adults with ADHD are prescribed drugs. Strattera (atomoxetine) generated peak sales of $667 million in 2004. In 2007, Shire acquired New River Pharmaceuticals for their their ADHD drug Vyvanse (lisdexamfetamine) for $2.6 billion. Interestingly, the European ADHD market is much smaller than that of the U.S., with sales of roughly $135 million in 2012.
Alcobra’s MDX is an extended-release oral formulation of 5-HT2B receptor antagonist metadoxine, an old drug for the treatment of alcoholic liver disease. The company has completed a Phase IIb and a Phase III trial in adults with ADHD. Moreover, the company is testing the drug in pediatric ADHD and Fragile X syndrome in Phase II trials.
In the Phase IIb trial, 120 ADHD patients with a mean CAARS-INV Score of 37.1±8.1 were enrolled. The MDX group showed statistically significant decrease in CAARS Score compared with the placebo group (12.5±8.8 vs. 8.9±9.2, p=0.02).
However, topline results from the Phase III trial were somewhat disappointing. In the intent-to-treat (ITT) population, the changes in CAARS Score between the MDX group and the placebo group were not statistically different (11.7 vs. 9.6, p=0.15).
The company then performed a post hoc analysis in a modified intent-to-treat (mITT) population which excluded four patients with extreme responses in the placebo group. Alcobra’s CMO, Jonathan Rubin, explained:
We conducted the mITT analysis after observing the disproportional effect of a few extremely large placebo responses which were inconsistent with what has been reported in previous ADHD trials of MDX or other agents.
Placebo effects are so significant in the trials in ADHD. A review in 2009 suggested that ADHD drugs may produce a placebo effect not in patients, but in the persons who evaluate them. If the extreme responses occurred in the MDX group, would Alcobra have excluded the so-called “not right” patients?
Alcobra announced the Phase III trial as a success, but the market did not accept the mITT analysis. The company’s stock sank 80% during October 2014. Surprisingly, the company comes back so quickly. The whole industry is on fire, I must say. Investors expect positive results with a subsequent acquisition by Big Pharma in early 2016.
Whether the second Phase III trial shows statistically significant results in ITT population remains to be seen. Anyhow, the reward/risk is not as attractive compared to before the first Phase III trial. Significant placebo effects observed in the previous trials create risks for investors.
 J Clin Psychiatry. 2012, 73(12), 1517-1523.
 J Dev Behav Pediatr. 2009, 30(2), 158-168.