Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Hope for Eli Lilly Alzheimer's Drug Wanes


It would be a major upside surprise if the company's treatment proved to be effective. Study data is expected out by the end of next month.

MINYANVILLE ORIGINAL There is little doubt in the minds of some Wall Street analysts that Eli Lilly's (LLY) experimental drug for Alzheimer's disease will fail.

"No one thinks (the drug) is going to work," ISI Group analyst Mark Schoenebaum says.

The assertion is barely an exaggeration. A growing number of analysts and investors are coming to that conclusion about a product once considered a potential blockbuster after a similar treatment being developed by Pfizer (PFE), Johnson & Johson (JNJ), and Elan (ELN) failed in studies. The disappointing results prompted those companies to pull the plug on their clinical program earlier this month. (See Elan Shares Drop After Alzheimer's Drug Fails in Study.)

Lilly plans to disclose top-line results of a study of its medicine solanezumab for mild to moderate Alzheimer's by the end of September. (No exact date is set.) The company then expects to present data at a conference of the American Neurological Association in Boston in early October and then at the Clinical Trials on Alzheimer's Disease meeting in Monte Carlo later that month.

Probability for success of this drug is less than 5%, according to Leerink Swann analyst Seamus Fernandez. Jefferies analyst Jeffrey Holford predicts failure and lowered his opinion rating of Lilly to a sell late last month.

"We just need to see the findings from our data and can't speculate at this time," Lilly spokeswoman Stefanie Prodouz says.

Both the Pfizer-J&J and the Lilly Alzheimer's programs were considered high-risk, high-reward bets on a very difficult to treat disease.

The question is how much will Lilly shares fall if the drug does indeed fail? The stock traded up less than 1% to $42.32 in morning trading Wednesday. The shares dropped more than 4% in the past month, but are up 19% over the past 12 months.

Schoenebaum says he thinks the stock will fall no lower than the high $30s because there are such low expectations for solanezumab. Investors who want to buy when the shares are depressed would be making bets that other drugs in Lilly's pipeline of developmental products will work or that the company will make good on vows to lower its costs.

Lilly is a prime example of the problem with big pharmaceutical companies as it experiences and faces even more patent cliffs for big drugs in the next few years. In addition to its Alzheimer's drug, the company has experimental treatments for diabetes, cancer, psychiatric conditions, and other diseases in the late stages of development.

Twitter: @brettchase

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos