The failure of an Alzheimer's disease drug made by Eli Lilly (LLY) , the company that gave the world mass-produced insulin, penicillin and the Salk polio vaccine, may help its rivals.
A late-stage study to assess Lilly's drug candidate, solanezumab, in people with mild dementia due to Alzheimer's was a dud.
Like a contagion, the Lilly-stoked selling has spread to AC Immune, Axovant, Biogen, Merck and Roche. But there could be growth opportunities.
Alzheimer's, characterized by the loss of brain cells leading to brain shrinkage, is one of the leading causes of death in the U.S., and there is no complete cure.
Lilly itself has spent more than $3 billion over two decades to find a cure for Alzheimer's but without much result.
Solanezumab is a monoclonal antibody that binds to forms of a type of protein called amyloid beta.
Lilly's approach was supposed to clear the protein before forming clumps called amyloid plaques, which probably leads to Alzheimer's. Drug candidates targeting amyloid plaques have struggled such as those at Johnson & Johnson and Pfizer, and Lilly's candidate is no different.
Lilly will likely revise full-year guidance and its 2017 outlook and record a hefty charge. In collateral damage, PDL BioPharma shares plummeted because it faces a huge haircut in royalties on solanezumab sales from Lilly.
Investors must figure out if they are holding stocks with Alzheimer's bets that are similar to Lilly's.
Roche's Gantenerumab is a fully human monoclonal antibody that binds and neutralizes disease-relevant aggregated forms of amyloid beta. Merck's MK-8931 concept also centers on stopping production of amyloid beta peptides, which is similar to the Lilly approach.