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Pfizer, Inc. (PFE - Analyst Report) recently announced disappointing late-stage results on intravenous (IV) bapineuzumab. Bapineuzumab is being developed under Pfizer and Johnson & Johnson’s (JNJ - Analyst Report) Janssen Alzheimer Immunotherapy R&D LLC's Alzheimer’s Immunotherapy Program (AIP). Pfizer and Janssen AI are partners in AIP and Elan Corporation has a 49.9% interest in Janssen AI following its September 2009 transaction with Johnson & Johnson.

Pfizer said that bapineuzumab failed to meet the co-primary endpoints in a phase III study (Study 301) being conducted in mild-to-moderate Alzheimer’s disease patients who do not carry the ApoE4 (apolipoprotein E epsilon 4) genotype.

This is the second set of disappointing data to be presented on bapineuzumab over the last few weeks. On July 23, Pfizer had announced that bapineuzumab failed to meet its co-primary endpoints in a phase III study (Study 302) that was conducted in patients with mild-to-moderate Alzheimer’s disease who carry the ApoE4 genotype. Results showed that bapineuzumab failed to achieve the co-primary endpoints namely change in cognitive and functional performance compared to placebo.

With bapineuzumab failing in two phase III studies, the Joint Steering Committee for the AIP decided to discontinue other studies being conducted with the candidate in mild-to-moderate Alzheimer’s disease patients.

These include two phase III studies (Study 3001 and Study 3002) being conducted by Pfizer as well as follow-on extension studies. The companies have communicated their decision to discontinue the studies to the regulatory authorities as well as clinical investigators.

Our Take

Bapineuzumab has always been a high risk-return candidate for the companies involved in its development. Expectations regarding this candidate’s chances of success have always been pretty low. While disappointing, the discontinuation of IV bapineuzumab is not surprising.

The successful development of therapies for the treatment of Alzheimer’s is challenging and we note that several companies have failed in developing treatments for Alzheimer’s. In fact, Pfizer has faced failure before in this field – the company had a collaboration agreement with Medivation (MDVN - Analyst Report) for an Alzheimer’s candidate, which was subsequently discontinued.

Another company that is working on the development of an Alzheimer’s candidate is Eli Lilly (LLY - Analyst Report). Lilly’s solanezumab (LY2062430) is in two phase III studies, EXPEDITION and EXPEDITION 2, with results likely to be reported later this year.

The Alzheimer’s disease market represents huge commercial potential and a successfully developed product could generate billions of dollars in sales once launched.

We currently have Neutral recommendations on Pfizer and Johnson & Johnson, both of which carry a Zacks #3 Rank (short-term ‘Hold’ rating). We, however, have an Underperform recommendation on Elan, which carries a Zacks #5 Rank (short-term ‘Strong Sell’ rating). We expect Elan shares to be significantly impacted by the discontinuation of bapineuzumab IV.

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