Enhancing Biomarker Use and Targeted Treatment Approaches in Alzheimer Disease: Aaron Burstein, PharmD

At CTAD 2025, Aaron Burstein (Alzheimer's Drug Discovery Foundation) highlighted a diagnostic shift from amyloid PET and CSF assays toward blood-based amyloid and tau biomarkers and discussed emerging targeted therapies, including trontinemab—a brain‑shuttle antibody designed to improve CNS delivery and potentially reduce amyloid‑related imaging abnormalities. He emphasized biomarker‑guided, precision approaches and the prospect of combination regimens and non‑amyloid targets, developments that could influence clinical readouts, partnership opportunities, and valuation dynamics for Alzheimer’s biotech developers.

Analysis

Market structure: Blood-based AD biomarkers and CNS-targeted delivery (eg, brain-shuttle antibodies) re-price value toward diagnostics platforms and platform biotech with CNS penetration tech. Winners: diagnostics/Simoa-like players (eg, QTRX), platform owners and large pharmas with diversified AD portfolios (LLY, BIIB, RHHBY/Genentech); losers: PET-scanner OEMs (GE, SIEGY) and CSF-centric labs as volumes shift. Expect 20–40% increase in demand for high-sensitivity blood assays over 12–36 months, boosting reagent and services pricing power while compressing per-test PET economics.

Risk assessment: Tail risks include regulatory rejection of surrogate biomarker approvals, ARIA or safety signals from new delivery platforms, and payer refusal to reimburse combination regimens—each could cause >30% equity re-ratings. Immediate (days) impact is muted; short-term (3–12 months) hinges on readouts and CMS/FDA guidance; long-term (1–5 years) depends on reimbursement and clinical adoption curves. Hidden dependencies: lab capacity, CAP/CLIA certification bottlenecks, and supply-chain constraints for assay reagents.

Trade implications: Favor selective longs in LLY (AD therapeutic optionality) and diagnostics exposures (QTRX) sized 1–3% each, hedge with a modest short in GE/SIEGY (1–2%) to capture imaging substitution over 12–36 months. Use 6–12 month call spreads on LLY (10–20% OTM) and long-dated (9–18 month) calls on QTRX to lever adoption while capping premium; consider long-vol straddles on small-cap brain-shuttle names (DNLI-sized risk) ahead of PoC readouts. Rotate 3–6% from broad healthcare into diagnostics/biotech R&D.

Contrarian angles: Consensus underestimates payer friction—blood tests may take 18–36 months to materially cut PET volumes, so immediate PET vendor collapse is overdone. Conversely, owners of validated brain-shuttle IP may consolidate pricing power and command 30–50% premium M&A within 24–48 months; this asymmetric outcome favors concentrated option exposure rather than broad sector bets.

Key Decisions for Investors

• Establish a 2–3% long position in Eli Lilly (LLY) over 6–12 months given donanemab and broader AD optionality; hedge with a 6–12 month 10–20% OTM call spread to limit premium; trim position by 50% on a 15% negative regulatory/safety headline or raise on positive Phase 3/CMS signals.
• Build a 1–2% long position in Quanterix (QTRX) (or similar high-sensitivity diagnostics plays) with target +30–50% upside over 12–24 months as blood-biomarker adoption scales; back exposure with 9–18 month ATM calls if implied vol is <80%; stop-loss -20%.
• Implement a pair trade: long QTRX (1%) / short GE (GE) (1%) to express diagnostic substitution of PET imaging over 12–36 months; unwind the short if GE outperforms by >10% relative to diagnostics in any 60-day window.
• Allocate 0.5–1% to long-vol (long-dated straddles or deep ITM calls) on select small-cap brain-shuttle developers (eg, DNLI-sized names) ahead of expected PoC readouts within 6–12 months; size small due to >40% binary risk and set a 50% loss cut.
• Monitor CMS/FDA biomarker and reimbursement announcements closely in the next 30–90 days; only increase diagnostics/therapy allocations beyond the stated sizes if CMS issues a positive coverage policy or FDA signals acceptance of blood-based surrogate endpoints.