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Eli Lilly and Company (LLY - Analyst Report) recently announced much awaited top-line results on Alzheimer’s disease candidate, solanezumab (LY2062430). Eli Lilly said that solanezumab failed to meet its primary endpoints in both the phase III EXPEDITION studies. However, the candidate demonstrated promising potential in slowing cognitive decline.

The identical multi-center, randomized, double-blind, placebo-controlled EXPEDITION studies (EXPEDITION1 and EXPEDITION 2) enrolled more than 2,050 patients suffering from mild-to-moderate Alzheimer's disease. Results showed that solanezumab failed to achieve the primary endpoints namely change in cognitive and functional performance compared to placebo.

The company plans to discuss the data with the US Food and Drug Administration (FDA) to determine the future developmental path for solanezumab. The Alzheimer's Disease Cooperative Study (ADCS) is conducting an independent analysis of the EXPEDITION study results, which will be presented at various upcoming scientific meetings in October 2012. An open-label extension study, EXPEDITION-EXT, is ongoing.

Our Take

Solanezumab has always been a high risk-return candidate for Eli Lilly. While disappointed with the phase III results, solanezumab’s failure did not come as a major surprise as chances of success were pretty low.

The successful development of therapies for the treatment of Alzheimer’s disease is challenging and we note that several companies have failed in developing treatments for the same. In fact, Eli Lilly has faced failure before in this field. The company suffered a major setback in August 2010 when it had to halt the development of another phase III Alzheimer’s candidate semagacestat (LY450139).

A few weeks earlier, Pfizer, Inc. (PFE - Analyst Report) had shelved its late-stage Alzheimer’s candidate, bapineuzumab, after it failed two phase III studies. Pfizer was developing the candidate in collaboration with Johnson & Johnson (JNJ - Analyst Report) and Elan Corporation .

The Alzheimer’s disease market represents huge commercial potential and a successfully developed product could generate billions of dollars in sales once launched. As per data provided by the Alzheimer's Association, approximately 5.4 million people have Alzheimer’s disease in the US alone.

We currently have a Neutral recommendation on Eli Lilly. The company carries a Zacks #2 Rank (short-term Buy rating).

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