Eli Lilly halts development of Alzheimer's drug

INDIANAPOLIS — Eli Lilly and Co. has stopped developing a potential Alzheimer's disease treatment at a time when the drugmaker is searching wide and far for new drugs to fill a large revenue hole that will form starting next year.

The Indianapolis company said Tuesday preliminary results from late-stage studies of semagacestat showed it did not slow the progression of Alzheimer's, and patients taking the drug actually fared worse than those on a placebo.

Despite the setback, Lilly Chairman and CEO John Lechleiter said the company remains committed to developing new drugs while competitors make large-scale acquisitions. The industry is racing to compensate for patent expirations that will hit in the next few years and expose many key drugs to generic competition.

"In a risky business like ours, these things do happen," he said. "One failure of this sort does not undermine our strategy."

Lilly has eight drugs in late-stage testing, the last step before a company seeks regulatory approval. That includes potential cancer and diabetes treatments and another Alzheimer's drug. The company also touts a pipeline of nearly 70 drugs that are in some form of human testing.

It also is awaiting a Food and Drug Administration decision on its antidepressant Cymbalta as a possible chronic pain treatment and a longer-acting version of Byetta, a diabetes drug on which it partners with Amylin Pharmaceuticals Inc.

Lilly, which supplements its pipeline with several smaller-scale acquisitions, faces one of the worst "patent cliffs" in the industry. It loses protection for its top seller, the anti-psychotic Zyprexa, next year and its second-best seller, Cymbalta, in 2013.

In addition, a U.S. District Court judge has ruled invalid a patent protecting the attention deficit hyperactivity drug Strattera. Lilly expects generic competition to enter the market soon.

To counter all this, Lilly aims to launch two new drugs a year by 2013.

"We think we're plenty big enough to continue to innovate and to bring new medicines forward that will help Lilly resume a growth trajectory following the expiration of these various patents," Lechleiter said.

However, analysts covering the company have doubts. Bernstein analyst Dr. Tim Anderson said in a research note Lilly's lineup of drugs in late-stage development "looks relatively thin."