Novartis Ramps Up Alzheimer’s Drug Pursuit as Rivals Fail

Novartis AG plans to ramp up its research in Alzheimer’s disease, a potential $20 billion market lacking a major contender and littered with three high-profile drug failures in the past year alone.

“This remains high on our radar, with high unmet medical need,” Tim Wright, who heads the Basel, Switzerland-based company’s drug development, said on a conference call arranged by Sanford C. Bernstein & Co. analyst Tim Anderson in April. Novartis didn’t respond to a request for comment on its Alzheimer’s research.

Novartis would be racing to catch up with Roche Holding AG and Merck & Co., which are conducting human tests on treatments for Alzheimer’s, the most common dementia illness. Drugmakers are vying to find a way to slow the disease, which may affect 65 million people by 2030. The field is marked with failures, including a study Baxter International Inc. released this month in which its Gammagard drug didn’t help patients.

“Should Novartis move into Alzheimer’s? Yes,” Michael Leuchten, an analyst at Barclays Plc in London, said by phone. “Will it be easy to do? No.”

Novartis is pursuing alternatives including licensing agreements, Wright said on the call. So far the drugmaker’s development in the area hasn’t progressed as quickly as Novartis expected over past years, he said.

Current Drugs

Novartis sells Exelon, a drug that lessens symptoms of the disease by preventing the breakdown of a substance linked to learning and memory. The drug, also used in Parkinson’s disease, may have about $930 million in sales this year, according to analysts’ estimates compiled by Bloomberg. Novartis bought a license to an Alzheimer’s vaccine from Cytos Biotechnology AG in 2003, and the companies completed a mid-stage trial in December.

“Alzheimer’s would really make a lot of sense for Novartis,” Olav Zilian, an analyst at Helvea SA in Geneva, said by phone. “But they have a lot of work to do if they want to position themselves.”

Novartis rose 1.7 percent to 73.65 Swiss francs in Zurich. The stock has returned 54 percent in the past 12 months, including reinvested dividends, compared with a 41 percent gain in the Bloomberg Europe Pharmaceutical Index.

Baxter’s Gammagard was the third experimental Alzheimer’s drug to fail in less than a year. The other two were Eli Lilly & Co.’s solanezumab and bapineuzumab, developed jointly by Pfizer Inc., Johnson & Johnson and Elan Corp.

Brain Plaque

The latter two drugs targeted the build-up of plaque in patients’ brains called amyloid, based on the hypothesis that by clearing the plaque or stopping it from forming, therapies could prevent damage that eventually leads to cognitive decline, loss of function, and dementia.

About 95 percent of Alzheimer’s research has been focused on amyloid, which is a risk, according to Clive Ballard, a professor of age-related diseases at King’s College London.

“Having so many eggs in one basket is probably a mistake,” Ballard said in a phone interview. Drugmakers should also focus on regenerative therapies and drugs that modify or inhibit so-called tau proteins, he said.

Sanofi won’t push hard to find an Alzheimer’s treatment because the science isn’t advanced enough to justify the costs to develop a drug, Chris Viehbacher, chief executive officer of the Paris-based drugmaker, said in April. While Bristol-Myers Squibb Co. said it won’t give up on Alzheimer’s research, it’s focusing mainly on cancer treatments.

The Alzheimer’s market could be worth $20 billion, Deutsche Bank estimated last year.

“It’s an area that we haven’t given up on,” Novartis’s Wright said on the call.