Elan Starts Phase II AD Study

Elan Corporation (ELN - Snapshot Report) recently initiated a phase II study on ELND005 (Study AG201) for the treatment of agitation/aggression in patients suffering from moderate-to-severe Alzheimer’s disease (AD).

The AG201 study will evaluate the efficacy, safety and tolerability of ELND005 for a period of 12 weeks in patients suffering from AD and experiencing at least moderate levels of agitation/aggression. Elan will enroll around 400 patients for the study in the US, Canada and other selected countries.

Elan stated in its press release that around 5.4 million people in the US and around 7.2 million people in the EU are suffering from AD. Almost 90% of AD patients develop neuropsychiatric symptoms (NPS) and around 60% of AD patients develop agitation/aggression. The company also stated that currently there are no approved therapies for agitation/aggression in the US and many other countries.

We note that companies like Pfizer, Inc. (PFE - Analyst Report), Eli Lilly and Company (LLY - Analyst Report) and Roche Holding (RHHBY) are also looking to enter the Alzheimer’s disease market.

ELND005 is also being developed as an adjunctive maintenance treatment in patients suffering from bipolar I disorder (BPD 1) to lengthen the time period between mood episodes. In August this year, Elan initiated a phase II placebo-controlled, safety and efficacy study with oral ELND005 for this indication.

In 2006, Elan had entered into an exclusive, worldwide collaboration agreement with Transition Therapeutics, Inc. (TTHI - Snapshot Report) to jointly develop and commercialize ELND005.

Elan and Transition Therapeutics modified their agreement in 2010, following which Transition Therapeutics stopped funding the candidate’s development and commercialization and has given up its 30% ownership of the candidate to Elan. Elan paid Transition Therapeutics $9.0 million in January 2011. However, Elan will no longer be required to pay the previously stipulated $25 million as a milestone payment on the commencement of the phase III study of ELND005.

The company made a one-time clinical milestone payment of $11 million to Transition Therapeutics for the first patient dosing in the BPD 1 study.

Our Recommendation

We are pleased with the company’s progress with ELND005. We expect investor focus to stay on the successful development of the candidate. We currently have a Neutral recommendation on Elan. The stock carries a Zacks #3 Rank (Hold rating) in the short run.