Eli Lilly Stops Development Of An Alzheimer's Drug

Posted on Sep 10, 2010 in Chronic Disease

by Peter Loftus

Eli Lilly & Co. (LLY) said it halted development of an experimental drug for Alzheimer’s disease after studies showed it worsened patients’ conditions and was associated with an increased risk of skin cancer.

The news underscores the difficulty in coming up with effective new treatments for the memory-robbing brain condition that mainly strikes the elderly, even amid advances in diagnosing the disease at earlier stages.

The disappointment also adds to the business challenges for Indianapolis-based Lilly. In recent days, the company has lost court rulings in patent disputes over certain drugs, and it faces a slew of patent expirations in coming years, which will clear the way for sales-eroding generic competition. Lilly’s efforts to come out with new drugs to replace the lost revenue are fraught with risk, as evidenced by the Alzheimer’s setback.

Lilly shares tumbled 88 cents, or 2.5%, to $34.69, in recent trading. Sanford Bernstein analyst Tim Anderson said the setback will make it more difficult for Lilly to rely on its internal drug research efforts to overcome its challenges. 

“Obviously these are setbacks,” Lilly Chief Executive John Lechleiter said in an interview Tuesday. But he added that Lilly has posted strong financial performance recently, has numerous other experimental drugs in its pipeline, and it has licensed in drugs that should contribute to sales growth.

“We’re certainly not standing still,” he said. “We firmly believe our innovation strategy is the right strategy, and we remain committed.”

The drug scrapped by Lilly, semagacestat, is known as a gamma secretase inhibitor, which was designed to work by blocking an enzyme in the brain that causes the formation of a substance called amyloid. It is believed that buildups of amyloid plaque in the brain cause Alzheimer’s.

Lilly compared semagacestat with a fake drug, or placebo, in two late-stage trials of more than 2,600 patients with mild-to-moderate Alzheimer’s. An interim analysis of the studies found that the cognition and ability to complete daily activities in patients taking the Lilly drug worsened to a greater degree than those on placebo.

The patients taking the Lilly drug also had higher rates of skin cancer than those on placebo. Richard Mohs, head of Lilly’s Alzheimer’s research, said Lilly had previously informed patients and doctors in the clinical trial several months ago of the potential risk of skin cancer.

Mohs said it wasn’t immediately clear what went wrong. He noted that the biological mechanism targeted by the drug is also involved in processing about 20 proteins that have activity at the cellular level. It is possible one of these activities could have contributed to the worsening of symptoms for patients taking the Lilly drug.

“Even a single enzyme such as gamma secretase has an effect on 20 proteins,” he said. “When one begins to interfere in what we think of as a pathologic cascade, you can often get unexpected effects, and that’s what happened here.”

Lilly said the decision to halt the drug’s development is expected to result in charges of 3 cents to 4 cents a share in the third quarter. The company affirmed its full-year earnings guidance.

The company noted that its decision to halt development of semagacestat doesn’t affect ongoing clinical trials of its other late-stage Alzheimer’s treatment, solanezumab. That drug works by a different mechanism, though it also targets amyloid.

A silver lining in the disappointing news is that Lilly isn’t on the hook for the entire cost of developing the failed drug. In 2008, Lilly struck a deal with outside investors TPG-Axon and Quintiles Transnational Corp. to receive funding of up to $325 million to help pay for the clinical trials of semagacestat and solanezumab. In exchange, the outside investors would get milestone payments and, if a drug reaches market, royalties.

Lechleiter declined to specify how much was spent on semagacestat, but said the total cost for studying both drugs was in the hundreds of millions of dollars.

Other companies have had disappointments in trying to advance Alzheimer’s treatment beyond currently approved drugs, which can only temporarily delay worsening of symptoms. Earlier this year, Pfizer Inc. (PFE) and Medivation Inc. (MDVN) announced negative results from another experimental Alzheimer’s drug, Dimebon.

Pfizer and Johnson & Johnson (JNJ) are co-developing another experimental Alzheimer’s drug, bapineuzumab. Results may not be known for several years.