Updates from Tuesday at 3:30 p.m. ET to include comments from Jim Cramer and Jack Mohr of Actions Alert PLUS.
Clinical trials of Alzheimer's drugs are always risky. Alzheimer's drug clinical trials altered midstream without the consent of regulators are, therefore, super risky.
The super risky situation Eli Lilly (LLY) is where finds itself in Tuesday after disclosing a change to the primary endpoint of its most important Alzheimer's disease clinical trial involving the beta-amyloid antibody solanezumab.
Lilly consulted with the U.S. Food and Drug Administration and its counterpart in Europe about the change but acknowledges regulators were not necessarily in agreement with the the company's plan.
The disappointing result prompted TheStreet's Jim Cramer, manager of the Action Alerts PLUS charitable portfolio, to drop Lilly.
"We believe LLY's disclosure is significant and reduces the already slim possibility of achieving regulatory approval for mild Alzheimer's," said Cramer and Research Director Jack Mohr on Wednesday. "In doing so, we believe the stock's risk/reward has been negatively skewed, with higher risk containing the upside and steepening the downside. The investment has become an increasingly speculative one, and we want to avoid what we view as an increasingly binary outcome amid diminishing clarity."
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Solanezumab ("sola" for short) has already failed to demonstrate a convincing benefit for mild to moderate Alzheimer's patients in previous, large clinical trials, so investor confidence is already shaky ahead of results from the EXPEDITION3 study in mild Alzheimer's patients expected in the fourth quarter.
Add the uncertainty surrounding a change to the primary endpoint of EXPEDITION3 and the 4% drop in Lilly's stock price Tuesday is understandable.
As announced, the new primary endpoint of the EXPEDITION3 study will measure only the change in cognition over time between sola and placebo.
The study's origin design called for co-primary endpoints measuring change to cognition and function. Under the amended trial design, function is now a secondary endpoint, Lilly said.
Lilly says the change was made because of "emerging scientific evidence" which suggests cognitive decline precedes and predicts functional decline in mild Alzheimer's patients. The decision to amend the primary endpoint was not based on an early look at data from the ongoing study, the company says.