Elan ( ELN) found no undue side effects in early-stage human tests of a novel Alzheimer's disease vaccine, but investors reacted in muted fashion and analysts said it's too early to predict whether the drug will succeed.

Elan's vaccine, called AN-1792, under development with American Home Products ( AHP), caused a stir last July when results of a trial in mice were published in Nature, the science journal. Data showed that Elan's compound seemed to help clear troublesome proteins known as amyloid plaques from the brains of mice that had been genetically altered to develop symptoms of Alzheimer's.

Some scientists think plaque deposits in the brain clog nerve signal transmission, causing the disorientation and forgetfulness that is common in Alzheimer's patients. But no one is certain what causes the brain-deteriorating disorder, which afflicts some 15 million people worldwide.

Elan reported the results of clinical tests at the World Alzheimer's Congress 2000 in Washington Tuesday. Its stock slipped 1, or 1.9%, to 50 15/16 in heavy trading, while American Home shares added 1, or 1.6%, to 59 5/8.

Analysts say the high failure rate of drugs in clinical trials, particularly for Alzheimer's, precludes sales forecasts for now. But most agree that an effective treatment for Alzheimer's could quickly become a top-seller, particularly as the 47 million baby boomers develop age-related disorders and demand new drugs.

"We don't pay attention to phase one or two trial data," says Scott Shevick, analyst with American Home underwriter Bear Stearns. "History says that no one, not companies or analysts, calls new drugs correctly." In agreement is Neil Sweig, an analyst with Ryan Beck, which hasn't underwritten for either company: "I have no interest in phase one data, due to the high failure rate." Shevick has a buy on AHP and Sweig a neutral rating, but neither analyst follows Elan.

Alzheimer's is proving to be one of the most difficult areas of medical research, although that hasn't stopped drug companies from pouring millions of dollars into finding new drugs for the disease.

In the past year, Aventis ( AVE) and Bayer both suffered high-profile failures of Alzheimer's drugs in late-stage clinical trials. And Warner-Lambert's Cognex, introduced in 1993 as the first of a new class of Alzheimer's drugs, has been overtaken by Pfizer's ( PFE) Aricept, now the dominant treatment, although Novartis' ( NVS) Exelon, introduced in May, is rapidly gaining market share. Warner-Lambert is now part of Pfizer.

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