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Will Lilly’s Solanezumab Setback Weigh on Other Alzheimer’s Stocks?

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Eli Lilly and Company’s LLY shares tumbled 10.5% following the release of highly-awaited data on its experimental Alzheimer’s disease (AD) treatment, solanezumab, from a late-stage study. The candidate was being investigated to see whether it can slow the progression of memory problems associated with amyloid, a protein that forms plaques in the brains of people with Alzheimer’s.

Solanezumab failed to meet the primary endpoint in the EXPEDITION3 study that was conducted in patients with mild dementia due to AD. Lilly said that while results directionally favored solanezumab, the magnitudes of treatment differences were small. With this latest failure, Lilly has decided to drop the development of solanezumab and will be taking a charge of about 9 cents per share in the fourth quarter.

LILLY ELI & CO Price

Cloud on Amyloid Hypothesis?

Lilly’s failure has spooked investors who are now wondering whether other anti-amyloid treatments in development will face a similar fate. Biogen Inc. BIIB was one the companies that felt the immediate impact of the solanezumab data. Shares were down 3.8% on concerns that Lilly’s results do not bode well for Biogen’s investigational early Alzheimer’s disease treatment, aducanumab.

However, when we look at Biogen’s third quarter conference call, the company had pointed out that although both aducanumab and solanezumab are amyloid beta antibodies, they have fundamentally different mechanisms of action. Aducanumab’s mechanism of action is more direct with the drug targeting aggregated forms of beta amyloid including soluble oligomers and insoluble fibrils deposited into the amyloid plaque in the brain of AD patients.

Biogen had also said that while positive solanezumab data would have given greater credence to the amyloid hypothesis of Alzheimer's disease, the different mechanisms of action would make it difficult to interpret the impact of a negative solanezumab result on aducanumab. Moreover, the patient population is slightly different. In fact, many experts feel that these two factors — a direct mechanism of action and a more appropriate patient population — could work in Biogen’s favor.

Aducanumab is currently in a couple of late-stage studies — early-stage data has been encouraging with aducanumab reducing amyloid plaque levels. Aducanumab enjoys fast track status in the U.S. and is one of the most important candidates in Biogen’s pipeline.


BIOGEN INC Price

Other companies that saw their stock prices being affected, albeit slightly, by Lilly’s failure include Merck & Co., Inc. MRK and Roche Holding AG RHHBY.

Merck is evaluating verubecestat (MK-8931), an enzyme beta-site amyloid precursor protein cleaving enzyme 1 (BACE1) inhibitor, to see if it can slow or stop the progression of Alzheimer's disease. Verubecestat helps stop the BACE enzyme from producing amyloid beta peptides. Inhibiting the actions of the BACE enzyme may help stop the formation of amyloid plaque deposits in the brain which may be the underlying cause of Alzheimer's disease.

Verubecestat is currently in a couple of pivotal studies for the treatment of mild-to-moderate AD and prodromal AD with results from the first phase III study expected in late 2017. Merck is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MERCK & CO INC Price

Roche has a couple of Alzheimer’s disease treatments in its pipeline — gantenerumab and crenezumab — while gantenerumab is designed to bind to aggregated forms of amyloid beta, crenezumab is designed to target all forms of amyloid beta.

ROCHE HLDG LTD Price

In contrast to Biogen, Merck and Roche, Axovant Sciences Ltd.’s AXON shares gained almost 5%. A key reason for this would be the different mechanism of action for Axovant’s lead pipeline candidate, intepirdine, which is in late-stage development for mild-to-moderate Alzheimer’s disease. Intepirdine is a 5-HT6 receptor antagonist — the mechanism of action is well established and the company expects to seek FDA approval in 2017.

AXOVANT SCIENC Price

Bottom-Line

The key takeaway from Lilly’s failure is that Alzheimer’s is a difficult-to-treat ailment. It has historically been a very challenging therapeutic area with quite a few stocks stumbling in their efforts to find a treatment. Lilly itself has faced failure before with solanezumab while companies like Johnson & Johnson JNJ, Pfizer, and Lundbeck among others have also had their share of setbacks in this field.

However, the market is highly lucrative which is why several companies continue to invest heavily in developing Alzheimer’s disease treatments. According to the Alzheimer's Association, in the 10 years from 2002-2012, 244 drugs were tested for Alzheimer’s out of which only one succeeded and went on to gain FDA approval.

While these numbers are far from encouraging, success in this area means huge returns considering an estimated 5.4 million Americans of all ages have Alzheimer’s disease in 2016 (Data: Alzheimer's Association). The market has immense commercial potential and companies coming out with new treatments could rake in billions of dollars in sales.

Investors will be focused on the upcoming International Conference on Clinical Trials for Alzheimer’s Disease (CTAD), scheduled for Dec 8-10, where clinical researchers will share scientific information on Alzheimer’s disease with each other and more information on the treatments in development including aducanumab will be available.

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