Following news that Elan’s (NASDAQ:ELN) developmental Alzheimer’s treatment, bapineuzumab, failed a Phase III trial in August and was subsequently discontinued, PropThink advised a position in Eli Lilly (NYSE:LLY) or Baxter International (NYSE:BAX) as risk-mitigated plays in the Alzheimer’s segment. Their two drug candidates, solanezumab and Gammagard respectively, remained as the only late-stage compounds in development for the fickle neurological disease. We considered the companies risk-mitigated plays based on strong dividends, with unexpected upside should either drug prove efficacious. After Monday, it appears that a position in Eli Lilly has paid off.
Eli-Lilly announced that solanezumab slowed memory loss and cognitive decline by 34% in its most recent Phase III trials. The company does not believe, however, that the drug will receive FDA approval based on the results, but hopes that the treatment still holds potential. They will determine the next steps for solanezumab after meeting with regulators. When neither of the two EXPEDITION trials met their primary endpoints, researchers pooled the data and were able to report the statistically significant results. There are currently no treatments that slow cognitive decline in patients with Alzheimer’s, only products that help with symptoms of the disease. An effective treatment, even if only mildly successful, would be entering an enormous, untapped market. We followed up coverage of LLY in late-August, and suggested that strength should continue into October.
Baxter International is set to release top-line Phase III data on Gammagard in the first half of next year. Data reported earlier this year demonstrated evidence that Gammagard may slow cognitive decline, but analysts have been hesitant to cite the small trial results as pivotal. Eli Lilly is up 8% since Monday afternoon when the data was released and has gained 22% since PropThink’s coverage in early August.
