CervoMed's Stock Soars After FDA Grants Orphan Drug Status to Dementia Treatment

Frontotemporal dementia is a rare form of dementia that affects behavior and language. Recently, the US Food and Drug Administration (FDA) has granted orphan drug status to CervoMed’s leading investigational therapy, neflamapimod, for treating this uncommon neurodegenerative disease. Following this announcement, CervoMed’s stock experienced a significant increase of 14.6%, rising from $7.98 to $9.15 overnight.

Neflamapimod is primarily targeted at frontotemporal dementia, but it is also under investigation for treating early-stage dementia with Lewy bodies. The ongoing Phase IIb RewinD-LB study is assessing the drug's effectiveness in 159 patients with early-stage Lewy body dementia, with top-line results anticipated next month. John Alam, the CEO of CervoMed, indicated plans to progress neflamapimod to a Phase III trial by mid-2025, with an expected data readout and regulatory submission by 2027, contingent on favorable results from the RewinD-LB trial.

Earlier trials of neflamapimod have shown promising outcomes. In the Phase IIa AscenD-LB trial, the drug candidate improved clinical dementia severity scores and functional mobility compared to a placebo. These improvements were particularly notable in patients with early-stage Lewy body dementia who did not exhibit tau pathology.

The FDA’s orphan drug designation is significant as it provides financial incentives for developing treatments for rare diseases. These incentives include tax credits for clinical trial expenses, a waiver of marketing application fees, and seven years of market exclusivity in the US upon approval. While there are approved treatments such as acetylcholinesterase inhibitors to manage symptoms of Lewy body dementia, no treatments currently target the underlying causes of the condition. Neflamapimod, an oral inhibitor of p38MAP kinase alpha, shows potential in addressing synaptic dysfunction, a reversible aspect of the neurodegenerative process in dementia with Lewy bodies.

Frontotemporal dementia, affecting fewer than 200,000 people in the US, also lacks approved treatments. Alam expressed satisfaction with the orphan drug designation, noting it as recognition of the scientific basis and potential of neflamapimod to treat this challenging condition. He highlighted the significant burden the disease places on patients and their caregivers.

CervoMed’s progress in developing neflamapimod has been bolstered by a strong financial foundation. In March 2024, the company secured up to $149.4 million in private placement funding, led by RA Capital Management and including contributions from Armistice Capital, Special Situations Funds, and Soleus Capital. This funding is expected to support the ongoing and future clinical development of neflamapimod.