This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Merck Hopes Alzheimer's Drug Fares Better Than Competitors

WHITEHOUSE STATION, NJ ( TheStreet) -- Alzheimer's patients are in dire need of effective therapies that can slow or even reverse the memory loss and cognitive decline which are the devastating hallmarks of the disease. Unfortunately, recent efforts at developing new drugs have come up short.

Next up will be Merck (MRK - Get Report), which is expected to release phase II data on its BACE inhibitor by the end of this year, following up on phase Ib data that demonstrated an anti-amyloid effect -- although the trial was conducted in healthy patients and not in Alzheimer's patients.

Of course, investors expectations for Merck's BACE inhibitor are quite low because of the failure of a similar drug developed by Eli Lilly (LLY - Get Report). In some way, this creates an asymmetric opportunity in that failure (the expected outcome) should have a limited effect on Merck's stock price, whereas success would have an outsized, upside effect. Incyte (INCY) added more than $1 billion to its market value last month after announcing some positive pancreatic cancer data, which illustrates what can happen when a low-expectation clinical trial produces a modicum of success. Merck will not move to the same degree given its current market cap but you get the idea.

In general, BACE inhibitors have low expectations because they are part of the larger beta-amyloid hypothesis that has both dominated the field of Alzheimer's research despite continued failure in the clinic. This past year Pfizer (PFE - Get Report) and Johnson & Johnson (JNJ - Get Report) reported a failed phase III trial of their beta amyloid targeting drug bapineuzumab. In addition, Eli Lilly reported what was essentially a failed phase III trial of solanezumab even though the company decided data were good enough to try again with another trial. Why would these failures have less read through to Merck's BACE drug?

Bapineuzumab and solanezumab are both monoclonal antibodies meant to clear beta-amyloid plaques from the brain. These plaques are thought to be more a cause of Alzheimer's as opposed to another symptom. But despite successfully clearing beta-amyloid plaque, neither drug was able to improve cognition or prevent memory loss.

BACE inhibitors work differently by seeking to prevent beta-amyloid plaques from forming. It's a reasonable approach but one which may generate unwanted side effects. Some preclinical work suggests BACE inhibitors might interfere with the formation of myelin, the insulating material around nerves. Lilly halted development of BACE inhibitor trials due to liver toxicity. Whether or not liver toxicity is specific to the Lilly drug or may be a class effect that could also strike Merck's BACE inhibitor isn't known.

It's difficult to predict a successful outcome for Merck's BACE inhibitor study. The odds are stacked against the drug, as they are for all Alzheimer's drugs in development to date. But working in Merck's favor are low expectation and the potential for mega-blockbuster sales if the drug is ever approved. This is just phase II study so a signal of activity, and not complete proof of efficacy, might be enough at this point to move Merck's stock higher.

Sobek has no positions in stocks mentioned in this article.
David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JNJ $112.22 -0.42%
LLY $74.87 -1.81%
MRK $54.81 -0.49%
PFE $33.40 -0.89%
AAPL $94.19 -1.04%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs