(Editor's note: Come see Adam Feuerstein at the Money Show in San Francisco. Adam will be speaking to attendees on Friday, Aug. 8, at 2:15 p.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits"); on a lunch panel on Saturday, Aug. 9, at 12:35 p.m. ("Tech and Biotech: Picks and Pans for 2008 and Beyond"); and on Sunday, Aug. 10, at 8 a.m. ("Biotech Investing for Individuals: How to Turn Geeky Science Into Fat Profits").
Updated from 8:35 a.m. EDT CHICAGO -- The coronation of bapineuzumab as the future king of all Alzheimer's drugs has been put on hold. Elan ( ELN) and Wyeth ( WYE), co-developers of bapineuzumab, entered Tuesday's presentation of phase II data at the International Conference on Alzheimer's Disease brimming with confidence. After more than a month of speculation, researchers, the public and Wall Street were finally going to see the clinical data that would clearly establish bapineuzumab as the game-changing treatment for Alzheimer's disease. Skeptics, including short-sellers of Elan shares, were going to be vanquished once and for all. By Tuesday night, however, the script had been rewritten. The presentation of the bapineuzumab data was weak, the results were underwhelming and inconclusive. Far more questions about the future of the drug were raised than were answered. Investors reacted accordingly, selling Elan and Wyeth shares sharply in after-hours trading. In recent trading Wednesday, Elan was sinking $12.21, or 36.2%, to $21.54, and Wyeth was losing $5.05, or 11.2%, to $40.06. As I did back in June when Elan and Wyeth first announced top-line results from the phase II bapineuzumab study, let's dissect the big issues affecting the drug Tuesday with a hypothetical Q&A. Those are some strong words you use above to describe the bapineuzumab data presentation. Aren't you being a bit harsh? Not really. Let's get real here. This phase II study failed its primary endpoint rather convincingly. Patients treated with bapineuzumab showed no improvement in either cognition or function compared to placebo. So, what did Elan and Wyeth do with these negative results? They essentially threw them out and rewrote the rules of the study in order to find groups of patients who responded. First, the two companies changed the statistical analysis plan. Second, they broke down and analyzed the data for efficacy based on a post-hoc subgroup comparing patients who are carriers and non-carriers of the ApoE4 gene, a genetic variant that increases a person's risk for developing Alzheimer's.
"Are you finding anyone who seriously thinks the bapineuzumab data show anything? I have never seen a better demonstration of randomness, even in the apoE4 non-carrier group, in my career. This is the most amazing intentional obfuscation of what is going on that I have ever seen. Truly astounding."And what about the Elan bulls? Again, I did hear from the same longtime Elan investor whom I quoted back in June. He writes:
"The data were quite interesting and encouraging. I cannot fathom the market reaction, but after-hours trading is not good at sorting through pretty complex stuff. Did the market think that Elan and Wyeth were going to announce an early filing and approval by the end of the year? "I think Elan and Wyeth will have an approved Alzheimer's disease drug within the next 30 months, and perhaps more than one. Bapineuzumab worked better than the multi-billion dollar approved Alzheimer's drugs in the non-carrier group at the dosages selected for further testing in phase III, and there is enough suggestion of efficacy in the carriers that the investment in two large phase III trials is warranted."Sounds like a continued standoff. Yup, but the playing field that was tilted in favor of the bulls appears now to be moving in the other direction. As a very public bapineuzumab skeptic, you must be feeling pretty good today. I feel a whole lot better and more confident than I felt on Monday, for sure.