Lilly - Another Reminder That Alzheimers Drugs Do Not Work

I was disappointed to see Lilly's (NYSE: LLY) announcement a few days ago that its Alzheimers drug semagacestat was not good enough to continue trials.

Disappointed ... but not surprised.

The pharmaceutical industry's record with drug candidates for Alzheimers is miserable. Only Namenda (from Forest Labs (NYSE: FRX) and Aricept (Pfizer (NYSE: PFE) and Eisai) do much good at all, and even those really only address symptoms for a relatively brief window of time.

A whole host of companies, though, have tried and failed to develop a drug - the roster includes Glaxo (NYSE: GSK), AstraZeneca (NYSE: AZN), Johnson & Johnson (NYSE: JNJ), Abbott Labs (NYSE: ABT), Pfizer, and Neurocrine (Nasdaq: NBIX). That is a partial list from my memory, and I absolutely guarantee that there are many more names that I could add to it if I did a quick Google search.

Why this rotten track record? Well, for starters, nobody really knows exactly what happens as part of AD. Sure, amyloid plaques seem to be involved somehow, but nobody really has proven definitively if they are a symptom or causative agent. Likewise, the action and involvement of tau proteins seems significant, but there is no established pathology of the disease.

What that all means is that drug developers do not have a clear target. Imagine if somebody handed you a bow and arrow, pointed to a dense patch of forest, said "there's a small rabbit in there somewhere ... get me a bullseye". If you managed to so much as wing the critter, it would be basically blind luck - and I am going to argue that the existence of Namenda and Aricept is basically just a product of blind luck (try enough compounds and something might work).

Now, companies have developed successful drugs in the past without fully understanding the underlying mechanisms (Lunacept, for instance), but clearly that has not worked so well for AD.

Unfortunately, more disappointment is likely. Pfizer and JNJ have bapineuzumab in late studies, but the data on improved mental function has not been supportive. Likewise, Elan (NYSE: ELN) is pushing on with ELND005 even though the interim analysis was not positive. All of these, including LLY's other late-stage AD drug, solanezumab, target lowering amyloid levels and it just does not seem like that is a credible approach for great success.

What about targeting tau? This seems a little more encouraging. Tau protein seems to be involved in forming neurofibrillary tangles and animal models of tau inhibition seem to show positive results. Bristol Myers (NYSE: BMY) has a drug developed along these lines. Likewise, TauRX's Rember is a tau-targeting hsp70 inhibitor that appears to help mental function ... though it does require high doses. Early-stage Oligomerix is also trying to develop a drug that targets tau proteins, but they are very early in development.

Outside of this is Baxter (NYSE: BAX) and its Gammagard product. This has shown some cognitive improvement in Phase 2 studies, as well as less swelling of the brain - an encouraging enough sign to continue, but not really indicative of a major blockbuster cure.

I certainly do not mean to bash any companies working on AD drugs. It is a terrible disease and I really do hope somebody finds a compound that can halt or reverse its effects. That said, I think the idea of casting around blindly for compounds that may work and hanging on to apparently disproven notions (like that reducing amyloid helps much) is not helping anybody.

For investors, just remember to be skeptical. If you find a pharmaceutical or biotech with a truly novel approach to AD, maybe it is worth a shot in your portfolio, but I would advise a lot of skepticism when it comes this space as a whole. Until scientists figure out the "how", I just do not have much confidence that Big Pharma will figure out the "what".