Alzheimer’s disease is the most common form of dementia and impacts a person’s memory and other cognitive functions. Millions of people suffer from Alzheimer’s worldwide and the number of people impacted is expected to rise significantly in the coming decades. Currently, there is no cure for the disease, but there are treatments that can help with some of the symptoms and research is being done to identify additional remedies.
• 6.5 million Americans age 65 and older live with Alzheimer’s in 2022, according to the Alzheimer’s Association.
• By 2050, the number of Americans age 65 and older living with Alzheimer’s is expected to increase to 12.7 million, according to the Alzheimer’s Association. The number is projected to increase further to 13.8 million by 2060.
• In the U.S., about 1 in 9 people (10.7 percent) age 65 and older suffers from Alzheimer’s, according to the Alzheimer’s Association.
• Changes in the brain can begin to occur 10-15 years before symptoms show up, according to the Penn Memory Center, a period which is known as “preclinical Alzheimer’s disease.”
• Nearly two-thirds of Americans with Alzheimer’s are women, according to the Alzheimer’s Association.
• Research has shown that the lifetime cost of care for those with Alzheimer’s is more than twice the amount incurred by those without Alzheimer’s, which translates into an incremental cost of $216,518, according to the Alzheimer’s Association.
• The U.S. federal government spends about $3.1 billion annually on Alzheimer’s and dementia research, according to the Alzheimer’s Association.
Investing in Alzheimer’s treatments
Investing in companies that are seeking to identify treatments and cures for Alzheimer’s has the potential to be lucrative for investors, but it is also highly risky. The success of treatments that are still in early stages is extremely difficult to predict and the future of some small companies may depend on the outcome of clinical trials.
Buying individual stocks of companies involved in Alzheimer’s research comes with the most potential profit, but you can also benefit from this research by buying a basket of health care or pharmaceutical ETFs, which allows you to purchase a more diversified portfolio of stocks. You’ll still benefit from progress made in Alzheimer’s treatments, but you won’t have the same risk of investing in individual stocks.
Here are some ETFs to consider. (Data as of June 24, 2022.)
iShares US Pharmaceuticals ETF (IHE)
The iShares U.S. Pharmaceuticals ETF seeks to replicate the investment performance of an index that tracks U.S. pharmaceutical stocks. You’ll get exposure to companies that manufacture prescription and over-the-counter drugs or vaccines.
10-year annualized return: 10.2 percent
Dividend yield: 1.6 percent
Expense ratio: 0.42 percent
VanEck Pharmaceutical ETF (PPH)
The VanEck Pharmaceutical ETF seeks to track the performance of the MVIS U.S. Listed Pharmaceutical 25 Index, which is used to track the overall performance of the pharmaceutical industry.
10-year annualized return: 9.7 percent
Dividend yield: 1.6 percent
Expense ratio: 0.35 percent
SPDR S&P Pharmaceuticals ETF (XPH)
The SPDR S&P Pharmaceuticals ETF seeks to track the investment performance of the S&P Pharmaceuticals Select Industry Index. The fund aims to provide diversified exposure to the pharmaceutical industry.
10-year annualized return: 6.0 percent
Dividend yield: 1.9 percent
Expense ratio: 0.35 percent
Leading treatments in development
A number of companies are working on Alzheimer’s treatments, with a few showing significant progress. Eli Lilly’s donanemab was granted the U.S. Food and Drug Administration’s breakthrough therapy designation in 2021 after showing signs of substantial improvement over already available therapies during a clinical trial. Lilly plans to submit its application for U.S. approval of the experimental drug by the end of 2022.
In June 2021, Biogen’s Aduhelm became the first FDA-approved drug to target the underlying cause of Alzheimer’s and not just its symptoms. But the drug is not without controversy. Some doctors have questioned whether the drug is actually effective, and three scientists resigned from the independent committee that advised the FDA on Aduhelm to show their disagreement with the drug’s approval.
Alzheon’s ALZ-801 is also in development and is currently the only oral treatment in Phase 3 testing for Alzheimer’s. Alzheon believes the drug has the potential to slow or stop the disease’s progression and possibly prevent symptoms. The company says the treatment is based on eight years of research and data from 2,000 patients.
Gene therapy treatments
One of the challenges of treating Alzheimer’s is that it can be difficult for drugs to reach the brain due to the blood-brain barrier, which stops antibodies and other proteins. Gene therapy is one possible solution to this, and clinical trials began in 2021 of a gene-therapy treatment that prevents brain cells from dying off. The trial involves 12 patients over three years and is being conducted by scientists at the University of California San Diego School of Medicine.
Gene therapy would allow for a drug to be produced within the brain itself and only need to be administered once, unlike other treatments that require ongoing administration. The treatment involves injecting a harmless virus carrying a key protein into certain areas of the brain, where doctors hope it will lead to production of the protein in nearby cells.
Companies conducting Alzheimer’s research
The following companies are conducting Alzheimer’s research, often as part of a broader pipeline of drug candidates. (Market cap and share price information as of June 27, 2022.)
Treatments: FDA granted “Fast Track” designation for its PRX012 antibody therapy in April 2022. The drug is currently in a Phase 1 clinical study for the treatment of Alzheimer’s.
Market cap: $1.3 billion
Share price: $27.42
AC Immune (ACIU)
Treatments: The Swiss-based biotech company focuses on treatments for neurodegenerative diseases with several clinical trials underway focused on Alzheimer’s and Parkinson’s. The company hopes to find a way to prevent Alzheimer’s.
Market cap: $274 million
Share price: $3.28
Eli Lilly (LLY)
Treatments: Lilly’s Donanemab was given breakthrough therapy designation in 2021 by the FDA after it showed signs of substantial improvement over already available therapies during a clinical trial. Lilly plans to submit its application for U.S. approval of the experimental drug by the end of 2022.
Market cap: $312.5 billion
Share price: $328.85
Denali Therapeutics (DNLI)
Treatments: Denali has a handful of drug candidates that target Alzheimer’s and other neurodegenerative diseases. The company was dealt a setback in January 2022 when the FDA placed one its drugs on clinical hold before it had even begun human trials.
Market cap: $3.8 billion
Share price: $30.84
Axsome Therapeutics (AXSM)
Treatments: Axsome develops drugs targeting a number of central nervous system conditions including Alzheimer’s. Its AXS-05 drug is under development and received “Breakthrough Therapy” designation from the FDA for major depressive disorder and Alzheimer’s disease agitation.
Market cap: $1.3 billion
Share price: $33.94
Alzheimer’s disease impacts millions of people directly and indirectly every day. The research being done on potential treatments, preventions and cures is encouraging and gives hope to those impacted by the disease. When it comes to investing in these different treatments, predicting one drug’s success over another is extremely difficult, making the space ripe with risk but also creating the potential for large profits. Be sure to know your own risk tolerance before diving in.
Keep in mind that buying a basket of securities in an industry can be a safer way to invest by spreading your risk across multiple companies. Your return potential likely won’t be as great, but your portfolio won’t depend on the results of just one or two trial outcomes.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.