Eli Lilly Stock (LLY) Implodes On Failed Alzheimer’s Data

Eli Lilly And Co (NYSE: LLY)

Eli Lilly stock is getting hammered in pre-market trading on Wednesday, down by over 15% (9:10EST) on news that its drug to treat Alzheimer’s patients, solanezumab, missed the study’s main goal when patients that were taking the drug did not experience a meaningful decline in the loss of cognitive ability.

What now For LLY?

While the market cap for LLY has declined by over $10 billion dollars this morning, the company is far from doomed. However, the failure does call into question the benefit of solanezumab as a standalone drug, since it had failed in two prior large scale studies to demonstrate it’s efficacy in treating patients with mild-to-moderate Alzheimer’s.

The question at this point is whether or not LLY is chasing a dream that may prove to be far more costly than beneficial. LLY had initiated an additional trial using solanezumab to treat patients with the mildest condition since they had seen some benefit in the earlier failed trials.

Alzheimer’s Market

LLY is not chasing a dream simply to prove a point. The Alzheimer’s market offers a huge opportunity, with the mind-robbing disease affecting more than five million people in the U.S. alone and expected to increase substantially worldwide, as both the Asian and European continent populations’ ages have risen sharply during the past two decades.

The degenerative disease is sometimes fatal, and it’s symptoms are clearly destructive on its path toward fatality. Alzheimer’s is the sixth leading cause of death in the U.S. and remains one of the only diseases that has not yet been treatable to the extent that the symptoms, which ultimately lead to dementia and death, have not been able to be effectively managed.

LLY chased the treatment using solanezumab despite researchers skepticism about the drug becoming an effective treatment. However, now facing a trio of failures with the drug, LLY may have to move on to find a better alternative treatment for the disease.

LLY Going Forward

Alzheimer’s has been a stubborn disease to manage, with only two drugs, Aricept and Namenda, being able to offer temporary benefit to patients, easing symptoms including memory loss, confusion, and agitation. No treatment has been able to stop or even slow the debilitating disease orĀ its effect on the brain’s nerve cells, which is that they ultimately stop functioning normally.

With Alzheimer’s patients living less than ten years after being diagnosed, the market is pressed to find a cure or at least an effective and manageable treatment.

If LLY is eager to fill that void, they can perhaps look to other clinical studies and enter acquisition mode to buy time as well as promise. There are at least 15 late stage clinical trials already in progress to treat the disease, with several being relatively similar to solanezumab. If LLY can’t leave the failure at rest, they may be able to combine the solanezumab analysis with other companies in late stage trials to come up with a viable treatment.

As with many of the large pharma companies, the most efficient course of late is to acquire rather than study. For LLY, if they are truly intent on pursuing a treatment for Alzheimer’s, acquisition may be the path of least resistance.

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[Image Courtesy of Wikimedia]

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