Aug. 17 (Bloomberg) -- Eli Lilly & Co. will stop development of one of two Alzheimer’s drugs the company has in final testing after trials showed the treatment didn’t work.
Two studies showed the experimental medicine, called semagacestat, didn’t slow disease progression, Indianapolis-based Lilly said in a statement today. The drug was also linked to a worsening of the ability to perform daily activities and a higher risk of skin cancer. Dropping semagacestat will add a charge of 3 to 4 cents a share in the third quarter, Lilly said.
The drug was in the last of three stages of testing usually needed for U.S. regulatory approval. Halting its development doesn’t affect clinical trials of Lilly’s other late-stage Alzheimer’s medicine, solanezumab, nor will it deter Lilly from pursuing additional therapies for the disease, Chief Executive Officer John Lechleiter said.
“It doesn’t in any way impact our commitment to Alzheimer’s,” Lechleiter said today in a telephone interview. “In addition to solanezumab, we have two other molecules in earlier stages” of testing for the disease.
Lilly fell 82 cents, or 2.3 percent, to $34.75 at 4 p.m. in New York Stock Exchange composite trading. The shares are down 2.7 percent this year.
Fill the Gaps
Investors and analysts have looked to Lilly’s late-stage Alzheimer’s medicines as potential revenue generators to fill the gap left when two top-selling medicines, the schizophrenia treatment Zyprexa and antidepressant Cymbalta, lose patent protection by 2013. A drug that stops or reduces memory loss could be worth more than $5 billion a year, Tony Butler, an analyst with Barclays Capital, said last month.
Expectations were already low for Lilly’s Alzheimer’s drugs because of so many past failures in the field, said Michael P. Krensavage, manager of Krensavage Partners LP, a hedge fund that owns Lilly shares.
“Another one bites the dust, basically,” Krensavage said by telephone today. “It’s going to be tough to beat Alzheimer’s.”
Current therapies for the disease address only its symptoms; they don’t cure or even slow it. There hasn’t been a new drug for Alzheimer’s since Namenda, from New York-based Forest Laboratories Inc., was approved in 2003. About a dozen drugs in mid- to late-stage testing have failed since then, according to data compiled by Bloomberg.
The medicine Lilly stopped developing today, the pill semagacestat, inhibits an enzyme called gamma secretase that’s tied to production of a plaque called beta amyloid, thought by researchers to be a main contributor to Alzheimer’s. The company’s other Phase 3 therapy for the disease, the intravenous medicine solanezumab, targets amyloid clearance through the bloodstream.
“Semagacestat, by interfering with gamma secretase, interferes with an enzyme involved in the processing of at least 20 other proteins,” Richard Mohs, Lilly’s team leader of Alzheimer’s research, said today in a telephone interview. “The effects we observed might be due to any of these effects of a gamma secretase inhibitor. We really don’t know.”
The two experimental drugs in earlier stages don’t address gamma secretase, Lechleiter said. Mohs and Lechleiter declined to say whether they target amyloid.
The failure today is “clearly another blow to their weak pipeline, and it increases the pressure on them to make some sort of acquisition,” said Jon LeCroy, of Hapoalim Securities in New York, in a telephone interview. “They have had a tough time developing new drugs.”
Lechleiter said Lilly will continue to do “smaller deals” and declined to identify how much the company may spend on acquisitions or licensing agreements. He reiterated that Lilly doesn’t plan to make a large-scale acquisition.
“We don’t need to combine or get larger,” Lechleiter said.
The company has almost 70 medicines in development, with eight in the third stage of human testing generally required for regulatory approval before halting semagacestat, he said.
Zyprexa generated $4.9 billion in revenue in 2009, while Cymbalta had sales of $3.1 billion. Those medicines lose patent protection in 2011 and 2013, respectively, while Lilly’s $1.7 billion cancer drug Alimta faces generic competition in 2016.
Researchers have announced setbacks with experimental treatments from GlaxoSmithKline Plc, AstraZeneca Plc, Martek Biosciences Corp., Johnson & Johnson, Abbott Laboratories, Pfizer Inc., Medivation Inc., and Myriad Genetics Inc. in the past year.
One of the drugs, bapineuzumab from New York-based Pfizer and New Brunswick, New Jersey-based J&J, reduced the buildup of amyloid plaque in the brains of patients with Alzheimer’s disease, according to a study published March 1. Patients getting the medicine in the trial didn’t show a clear improvement in mental function.
On Aug. 9, Dublin-based Elan Corp. and Transition Therapeutics Inc. of Toronto said their experimental Alzheimer’s disease drug, ELND005, will move into the last stage of human tests, even though the drug failed to meet an interim study’s main goals.
The drug didn’t improve patients’ mental status or daily living activities, the main goals of the trial.
Also today, Cymbalta was shown to help people with chronic pain, and wasn’t linked to new side effects, according to a report from the Food and Drug Administration, which is weighing whether to expand use of the product.
In addition to impending patent expirations for Cymbalta and Zyprexa, Lilly’s Strattera for attention deficit hyperactivity disorder will soon face generic competition after the drugmaker lost a court case last week. A July 28 ruling invalidated a patent on the cancer medicine Gemzar that may allow generic competition two years earlier than Lilly had projected on the treatment.
“It’s stacking up to be a terrible month for Lilly, that’s for sure,” Krensavage said. “At a time when it needs something to go right to deal with the patent expirations that it’s facing, it’s been rough.”
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