Overview

Alder BioPharmaceuticals (ALDR) is a clinical-stage biopharmaceutical company that discovers, develops and seeks to commercialize therapeutic antibodies with the potential to meaningfully transform the treatment paradigm in migraine. All of its product candidates were discovered and developed by Alder scientists using its proprietary antibody technology platform coupled with a deliberate approach to design and select candidates with properties that the company believe optimize the therapeutic potential for patients and commercial competitiveness.

Alder BioPharmaceuticals is focusing its resources and development efforts principally on eptinezumab (ALD403), its most advanced solely-owned product candidate, in order to maximize its therapeutic and commercial potential. Eptinezumab is being evaluated in a pivotal trial program for the prevention of migraine, with a Biologics License Application (BLA) submission to the U.S. Food and Drug Administration (FDA) planned for the first quarter of 2019. Migraine is a serious neurological disease affecting about 36 million people in the United States. Of that number, approximately 13 million people in the United States are candidates for a migraine prevention therapeutic. Of these candidates for migraine prevention, the company estimate that there are between five million to seven million people living with episodic and chronic migraine who are the most highly impacted patients, and they typically experience eight or more migraine days per month. Current preventive migraine treatment options, available in the market today, are challenged by safety, efficacy and tolerability limitations. Epidemiologic studies suggest that approximately 38% of migraineurs would benefit from preventive therapies, but only 11% currently receive them. As a result, the company believe there is a significant, unmet need for new treatment and prevention options. The company plan to focus its initial commercialization efforts for eptinezumab on the approximately 3,000 headache specialists that see the largest number of these highly impacted patients. The company estimate this U.S. market opportunity for eptinezumab is approximately $1.5 to $2.0 billion.

Eptinezumab is a genetically engineered monoclonal antibody inhibiting calcitonin gene-related peptide (CGRP), a small protein and a validated target that is understood to drive migraine initiation, maintenance and chronification. Designed to deliver a competitively differentiated approach to migraine prevention, the company believe eptinezumab holds the potential to be a transformative therapeutic and meet a profound medical need, changing the migraine prevention treatment paradigm for physicians and patients living with migraine.

The company's deliberate approach to engineering and developing eptinezumab is designed to provide a unique clinical profile that, after a single administration via an infusion procedure, provides rapid, effective and sustained migraine prevention. The company believe that this clinical profile, as supported by data from its clinical trials, will present a potentially compelling value proposition for patients, physicians, payors and its stakeholders.

Eptinezumab is the only potent and selective anti-CGRP monoclonal antibody in clinical development delivered by infusion. The company believe that eptinezumab’s design, coupled with the infusion mode of administration, provides the following key benefits:

High specificity and strong binding for rapid and sustained suppression of CGRP biology;Allows for the total dose to be immediately active to inhibit CGRP with 100% bioavailability; andSupervised medication administration has the potential to promote patient adherence while maximizing product control and consistency of delivery.

In its first Phase 3 pivotal trial, PRevention Of Migraine via Intravenous ALD403 Safety and Efficacy 1 (PROMISE 1) for the prevention of frequent episodic migraine, and its second Phase 3 pivotal trial, PRevention Of Migraine via Intravenous ALD403 Safety and Efficacy 2 (PROMISE 2) for the prevention of chronic migraine, eptinezumab has demonstrated:

Rapid: Suppression of migraine risk is achieved on the first day post infusion:On Day 1 post infusion, the risk of having a migraine was reduced by >50% versus baseline following a single administrationEffective: Significant days of migraine freedom attained within 1 month following a single administrationApproximately 1 in 3 patients had a ≥75% reduction in migraine days within 1 monthMore than half of patients had a ≥50% reduction in migraine days within 1 monthSustained: Migraine free days sustained for 3 months following a single administration≥50% and ≥75% reductions in migraine days sustained through 3 monthsAverage 15-17% of patients had no migraines for months 1 to 3Safety and tolerability profile consistent with earlier eptinezumab studies

The company plan to submit a BLA to the FDA for eptinezumab in the first quarter of 2019. The pivotal trial program, in support of its BLA submission, consists of PROMISE 1, PROMISE 2 and a single open-label Phase 3 clinical trial. PROMISE 1 commenced in October 2015 and is evaluating the safety and efficacy of eptinezumab once every 3 months for one year in 888 patients with episodic migraine, defined as four to 14 migraine days per month. PROMISE 2 commenced in November 2016 and is evaluating the safety and efficacy of eptinezumab once every 3 months for 6 months in 1,072 patients with chronic migraine, defined as 15 or more headache days per month, with diagnostic and therapeutic features of migraine being present on eight or more days per month. The open-label trial commenced in December 2016 and is evaluating the long-term safety and tolerability of eptinezumab once every 3 months for one year in approximately 120 patients with chronic migraine. On June 27, 2017, the company announced top-line results from PROMISE 1, showing that eptinezumab met the primary and key secondary endpoints. On January 8, 2018, the company announced top-line results from PROMISE 2, showing that eptinezumab met all primary and key secondary endpoints. Alder BioPharmaceuticals has completed enrollment in the open-label trial and expect to announce top-line results in the first half of 2018. Alder BioPharmaceuticals is also focused on executing key chemistry, manufacturing and controls, or CMC, activities supporting its BLA submission, including a pharmacokinetic comparability study to be completed in the second half of 2018 to ensure commercial readiness of supply upon launch.

Based on the strength of eptinezumab’s clinical profile, supportive feedback Alder BioPharmaceuticals has received from the physician community, and the market potential for eptinezumab delivered via a 30 minute infusion, Alder BioPharmaceuticals has determined the most prudent use of its resources in the near-term is in support of its planned BLA submission. With respect to a subcutaneous route of administration, the company believe it is potentially an important way to enhance the value of eptinezumab and will provide an update on its strategy and future plans for this route of administration after the company receive confirmation from the FDA that its BLA submission has been accepted for filing.

Assuming eptinezumab administered via infusion is approved by the FDA, the company plan to focus its initial commercialization efforts on procedure oriented headache specialists in the United States with a specialty sales force sizing of approximately 75 to 125. The company believe that these headache specialists comprise neurologists, pain specialists and primary care physicians and treat the highest proportion of the five million to seven million highly impacted migraine patients described above. The company estimate this group of headache specialists to number approximately 3,000 physicians. The company believe these physicians have a stronger preference for eptinezumab delivered via infusion versus self-administered anti-CGRP options due to the strength of eptinezumab’s clinical profile. These physicians utilize in-office procedures and have previously prescribed infusion therapies. The company estimate that 94% of these physicians have previously prescribed an infusion therapy for migraine or other conditions. They administer infusion therapies within practice, hospital, or free-standing infusion centers. They value patient adherence benefits associated with supervised medication administration and they have an infrastructure in place for patient flow, supply and reimbursement.

Alder BioPharmaceuticals is committed to commercializing eptinezumab in the United States as a migraine prevention therapy, and are focused on capturing the full commercial value of eptinezumab globally. The company recognize the potential for strategic partnerships or other arrangements that bring additional capabilities and infrastructure, as well as value to the program. However, its current plans and activities are centered on the planned BLA submission, preparing for commercial drug supply and its own initial commercialization efforts, and the company will only pursue such partnerships or arrangements at a time and on such terms that the company believe have the potential to deliver the greatest value to the eptinezumab program and its stakeholders.

The company's product candidate pipeline also includes ALD1910, a preclinical monoclonal antibody that targets pituitary adenylate cyclase-activating polypeptide-38 (PACAP-38). ALD1910 is undergoing investigational new drug (IND)-enabling studies for the prevention of migraine. PACAP-38 is a protein that is active in mediating the initiation of migraine, and the company believe that ALD1910 holds potential as a treatment for migraineurs who have an inadequate response to therapeutics directed at CGRP or its receptor. The company's third pipeline candidate is clazakizumab, designed to block the pro-inflammatory cytokine IL-6. In May 2016, the company licensed the exclusive worldwide rights for clazakizumab to Vitaeris, Inc., or Vitaeris, based in Vancouver, British Columbia. In November 2017 Alder and Vitaeris amended the license agreement for clazakizumab and Vitaeris and its shareholders, including Alder, entered into a strategic collaboration and purchase option agreement (the “option agreement”) with a third party, CSL Limited, an Australian entity, to expedite the development of clazakizumab as a therapeutic option for solid organ transplant rejection. Prior to the license to Vitaeris, clazakizumab completed two positive Phase 2b clinical trials establishing proof-of-concept in patients with rheumatoid arthritis.

Alder BioPharmaceuticals was incorporated in 2002 and have not generated any product revenue. Alder BioPharmaceuticals has funded its operations primarily through sales of its equity securities, debt securities and payments from its former collaboration partners. Alder BioPharmaceuticals is focusing its resources and development efforts principally on eptinezumab in order to maximize its therapeutic and commercial potential.

Recent Developments

Top-Line Results for PROMISE 2 Phase 3 Pivotal Clinical Trial

On January 8, 2018, the company announced that eptinezumab met primary and all key secondary endpoints with very high statistical significance vs. placebo in PROMISE 2. The primary endpoint, demonstrating statistically significant reductions in mean monthly migraine days from baseline (average of approximately 16.1 days) over weeks 1 through 12 was met with a reduction of 8.2 monthly migraine days for 300mg (p<0.0001) and 7.7 days for 100mg (p<0.0001) compared to a reduction of 5.6 days for placebo.

The key secondary endpoints and other endpoints met include:

Migraine prevalence Day One post-infusion: 52 percent reduction (300mg, p<0.0001) and 51 percent reduction (100mg, p=0.0001) in migraine risk beginning Day One post-infusion compared to 27 percent for placebo (p-values reflect Day One prevalence rate comparison between eptinezumab vs. placebo).50% responder rates for weeks 1 through 12: 61 percent (300mg, p<0.0001) and 58 percent (100mg, p<0.0001) of patients achieved 50 percent or greater reduction in migraine days from baseline compared to 39 percent for placebo.75% responder rates for weeks 1 through 4: 37 percent (300mg, p<0.0001) and 31 percent (100mg, p<0.0001) of patients achieved a 75 percent or greater reduction in migraine days from baseline, compared to 16 percent for placebo.75% responder rates for weeks 1 through 12: 33 percent (300mg, p<0.0001) and 27 percent (100mg, p=0.0001) of patients achieved a 75 percent or greater reduction in migraine days from baseline, compared to 15 percent for placebo.100% responder rates for weeks 1 through 12 (post hoc analysis): an average 15 percent (300mg, p<0.0001, unadjusted) and 11 percent (100mg, p<0.0001, unadjusted) of the patient population had no migraines for months 1 to 3, compared to 5 percent for placebo.

All other pre-specified key secondary endpoints were met with very high statistical significance.

The observed safety profile in PROMISE 2, to date, is consistent with previously reported eptinezumab studies. Adverse event rates among eptinezumab-treated subjects were similar to placebo-treated subjects. The most commonly reported adverse events for eptinezumab, occurring at an incidence of 2.0% or greater, were nasopharyngitis (common cold) (6.3 percent), upper respiratory infection (4.0 percent), nausea (3.4 percent) and urinary tract infection (3.1 percent), arthralgia (joint pain) (2.3 percent), dizziness (2.6 percent), anxiety (2.0 percent) and fatigue (2.0 percent). Full safety data will be available at the completion of the trial.

Settlement and License Agreement

In January 2018, the company entered into a European patent settlement and global license agreement with Teva Pharmaceuticals International GmbH, or Teva GmbH. The agreement resolved its appeal following opposition proceedings before the European Patent Office, or EPO, related to Teva GmbH’s European Patent No. 1957106 B1, with respect to CGRP antagonist antibodies, and provided clarity regarding its freedom to develop, manufacture and commercialize eptinezumab. Under the terms of the agreement, the company received a non-exclusive license to Teva GmbH’s CGRP patent portfolio, which includes the opposed European patent, to develop, manufacture and commercialize eptinezumab in the United States and worldwide, excluding Japan and Korea. While the agreement does not provide it with a license for Japan and Korea, the company believe Alder BioPharmaceuticals has freedom to develop, manufacture and commercialize eptinezumab in these countries. In exchange for the license, the company agreed to withdraw its appeal before the EPO; make an immediate one-time payment of $25 million to Teva GmbH, which the company made in January 2018; make a second one-time payment of $25 million upon the approval of a BLA for eptinezumab with the FDA or of an earlier equivalent filing with a regulatory authority elsewhere in the license territory in which any Teva GmbH licensed patents exist; and pay $75 million at each of two sales-related milestones (at $1 billion and $2 billion in annual sales) and provide certain royalty payments on net sales at rates from 5% to 7% following the commercial launch of eptinezumab.

Executive and Board Appointments

Effective March 15, 2018, Paul B. Cleveland, a member of its Board of Directors, was appointed to serve as its Interim President and Chief Executive Officer, following a mutual decision between its Board of Directors and Randall C. Schatzman, Ph.D., its former President and Chief Executive Officer, to have Dr. Schatzman step down as President, Chief Executive Officer and as a director. Mr. Cleveland continues to serve as a director on its Board of Directors. Alder BioPharmaceuticals is conducting a search for a permanent President and Chief Executive Officer.

Effective April 16, 2018, Erin M. Lavelle was appointed to its newly created position of Chief Operating Officer, reporting to Mr. Cleveland. Ms. Lavelle has responsibility for leading its operational strategies and planning, and driving continued progress towards the commercialization of eptinezumab.

Effective April 23, 2018, Eric G. Carter, Ph.D., M.D. was appointed to serve as its Interim Chief Medical Officer, reporting to Mr. Cleveland. Dr. Carter is responsible for leading the company through the BLA submission process for eptinezumab and facilitating other clinical and commercial advancement activities.

Effective April 26, 2016, Jeremy Green, Founder and Portfolio Manager of Redmile Group, LLC, was appointed to serve as a Class III director on its Board of Directors until its 2020 Annual Meeting of Stockholders and until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. Mr. Green has also been appointed to serve as a member of the Nominating and Corporate Governance Committee of its Board of Directors.

Eptinezumab Data Presentations at American Academy of Neurology Annual Meeting

In April 2018, the company delivered eight eptinezumab presentations at the 70th Annual American Academy of Neurology Annual Meeting, which included new data from PROMISE 1 that demonstrated the following: following one quarterly infusion, patients with a 75% or greater response experienced increased migraine-free intervals (median 32.5 days) and improved quality of life outcomes; and long-term and further reductions in migraine risk following the third and fourth quarterly infusions, with 51.5 percent of patients on average achieving a 75 percent reduction or greater of monthly migraine days from baseline compared to 38.7 percent for placebo. These data further reinforced the clinical profile demonstrated by its earlier data, as well as its belief that eptinezumab, if approved, has the potential to be an important treatment option for physicians and patients living with migraine.

Financings

On January 12, 2018, the company received approximately $97.7 million in net proceeds from the sale of shares of convertible preferred stock in a committed equity financing with certain institutional and other accredited investors affiliated with or managed by Redmile Group, LLC. In February 2018, the company received $277.7 million in net proceeds from an underwritten public offering of 2.5% convertible senior notes due 2025, or the Convertible Notes.

Pipeline

Manufacturing

Alder BioPharmaceuticals has adopted a manufacturing strategy of contracting with a variety of contract manufacturing organizations, or CMOs, within North America and Europe for the manufacture of eptinezumab, ALD1910, and future product candidates. This has enabled it to produce products under current Good Manufacturing Practices, or cGMP, controls for its completed and planned clinical trials. A protocol of methods has been established at these manufacturers along with specific testing facilities to generate sufficient information to inform the appropriate regulatory authorities. The company historically relied on a single smaller scale CMO to manufacture and provide it with clinical supplies of eptinezumab. Alder BioPharmaceuticals has entered into agreements with other CMOs to manufacture eptinezumab drug substance and drug product at larger scale as the company prepare for commercialization. Alder BioPharmaceuticals is conducting a pharmacokinetic comparability study of its initial commercial supply of eptinezumab for its BLA submission planned for the second half of 2018. The company expect to use eptinezumab manufactured by its commercial suppliers in future clinical studies. The company anticipate there will be continued interaction with additional CMOs as the company advance other product candidates.