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Lilly and Biogen Stocks Get Hit as Another Alzheimer's Treatment Fails a Trial

Eli Lilly said its drug solanezumab had failed in a trial of patients with dominantly inherited Alzheimer’s disease.

Eli Lilly said its drug solanezumab had failed in a trial of patients with dominantly inherited Alzheimer’s disease.

Another blow to what was once the leading theory of what caused Alzheimer’s disease is battering shares of Eli Lilly, which announced a trial failure on Monday, and of Biogen, which is counting on regulators to approve its own drug that works similarly.

On Monday, Lilly (ticker: LLY) said its drug solanezumab had failed in a trial of patients with dominantly inherited Alzheimer’s disease. Shares of the drug company were down 4.1% in premarket trading on Monday. S&P 500 futures were off 0.1%.

Biogen (BIIB), meanwhile, was down 1.8%, potentially on fears that regulators may see the solanezumab failure, and the failure of a Roche (RHBBY) Alzheimer’s disease drug also announced on Monday, as a reason not to approve aducanumab, Biogen’s Alzheimer’s drug, which failed late-stage trials but still has been submitted for approval.

Drug companies have a long history of failed attempts to produce a cure for Alzheimer’s. So why are Lilly’s investors taking it so hard?

“The ‘you have to be there for Alzheimer’s but there is no way this will work’ trade is one we have seen before and will surely see again,” Jared Holz, Jefferies health-care trading desk analyst, wrote in a note out Monday morning.

In other words: Investors may not have been particularly confident of the Lilly trial’s success, but a functional Alzheimer’s disease treatment would have been so huge that lots of people made bets on the company anyway, on the remote chance that the drug would work.

“While Alzheimer’s has been an extremely difficult disease for successful drug development and we do not have any revenues for solanezumab in our Lilly model, we believe some investors had been cautiously optimistic on a positive outcome,” Mizuho analyst Vamil Divan wrote in a note Monday.

In the Lilly trial, 50 patients were given solanezumab, some for as long as four years, and 40 were given a placebo. The study was determined not to have achieved its primary endpoint, and Lilly said it wouldn’t attempt to submit the drug for approval to treat people with dominantly inherited Alzheimer’s disease. Other studies of solanezumab in Alzheimer’s are continuing, including a study known as the Anti-Amyloid Treatment in Asymptomatic Alzheimer’s study.

In a note Monday, Cantor Fitzgerald analyst Louise Chen wrote that the news on the study’s failure wasn’t surprising, “given the small study size, patient population and novel trial design.”

Chen said the disappointment likely had no implications for the other solanezumab study, known as A4. “The A4 study is a much larger study, with a different endpoint, studying a different patient population (asymptomatic with confirmed amyloid versus DIAD),” she wrote.

Also on Monday, Roche said that its experimental Alzheimer’s disease drug, ganterenerumab, failed in a trial. Both the Roch and Lilly drugs attempt to treat Alzheimer’s by attacking beta amyloid plaques in the brain, which one theory of the disease links to the illness. That theory has been battered in recent years, in no small part by the failures of drug trials.

One other drug that relies on the so-called amyloid hypothesis is Biogen’s aducanumab, which Biogen has aid it plans to submit for Food and Drug Administration approval despite the drug appearing to fail in Phase 3 trials last year.

On Monday, prominent biotech Twitter commentator @AndyBiotech wondered whether the Roche and Lilly failures could make it harder for Biogen to win FDA approval for aducanumab.

“How will that affect FDA’s perception on amyloid hypothesis and $BIIB aducanumab filing?” he asked.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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