DUBLIN ( TheStreet) -- Elan ( ELN) and Transition Therapeutics ( TTHI) cut the two highest doses of their experimental Alzheimer's disease drug from a phase II study after safety monitors grew concerned about nine patient deaths, the companies said Tuesday.

The emergence of a safety problem potentially tied to the Alzheimer's drug ELND005 will inevitably raise concerns about whether the drug dosed at lower levels can still be effective.

Elan and Transition are expected to use results from this phase II study of ELND005 to determine whether or not to push the drug forward into pivotal phase III studies. That decision should come in 2010.

Patients being treated with 1000 mg and 2000 mg doses of ELND005 are being withdrawn from the study while patients treated with a 250 mg dose or placebo will continue, the companies said.

Independent safety monitors made the decision to amend the study after reviewing safety data, including reports of nine deaths amongst patients treated with the two highest doses of ELND005. The deaths have not yet been directly attributed to the drug, said Elan and Transition.

Developed initially by Transition, ELND005 is designed to work by interfering with the process in which protein fragments in the brain clump together to form plaques. These plaques damage nerve fibers in the brain that lead to the reduced cognition and memory problems that are the hallmark of Alzheimer's disease. ELND-005 is designed to work itself between these protein fragments, preventing them from coming together and allowing them to be cleared from the body.

Elan and Transition signed a collaboration deal in 2006 to jointly develop ELND005.

Elan has two other Alzheimer's drugs in clinical studies, including bapineuzumab, partnered with Pfizer ( PFE - Get Report) and Johnson & Johnson ( JNJ - Get Report). Results from the first phase III study of bapineuzumab are expected towards the end of 2010.

Elan shares closed Monday at $6.70 but were trading lower Tuesday morning on European exchanges.

Seattle Genetics, Takeda Partner on Blood Cancer Drug

Seattle Genetics ( SGEN - Get Report) added a new drug development partner Tuesday after losing a collaborator last week.

Millennium, the U.S.-based cancer drug arm of Japanese drug maker Takeda, has agreed to a global partnership to co-develop and market Seattle Genetics' experimental blood cancer drug brentuximab, also known as SGN-35.

Seattle Genetics is bringing Millennium/Takeda aboard as a partner just a few days after the Genentech unit of Roche relinquished its development rights to another Seattle Genetics drug, SGN-40.

A pivotal, phase II study of brentuximab in patients with advanced Hodgkin lymphoma is full enrolled, with data expected in the second half of 2010.

Under the new agreement, Takeda is paying $60 million upfront to Seattle Genetics for rights to market brentuximab outside the U.S. and Canada. Seattle Genetics will sell brentuximab in the U.S. and Canada and receive double-digit royalties from Takeda on sales of the drug in its licensed territories.

The two companies will split development costs of brentuximab equally, with Takeda estimating that its shares of those expenses will total $75 million in the first three years.

Seattle Genetics is also eligible for up to $230 million in future milestone payments from Takeda.

Takeda acquired Millennium Pharmaceuticals of Cambridge, Mass., for $9 billion in April 2008 in order to substantially increase its U.S. presence and push into blood cancer drugs. Millennium's leading drug is Velcade, a treatment for multiple myeloma which competes primarily with Celgene's ( CELG - Get Report) Revlimid.

Seattle Genetics shares closed Monday at $8.94.

-- Reported by Adam Feuerstein in Boston

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