Eli Lilly said August 17 it would halt development of its Phase III Alzheimer's drug candidate semagacestat, casting some doubt on the efficacy of novel gamma secretase inhibitor drugs and slowing Lilly's late-stage pipeline as the firm struggles to replace future revenues that will be lost to drugs going off patent.

In an interim analysis of two late-stage trials, patients taking orally administered semagacestat not only failed to show improvement, but displayed a worsening of cognition and ability to perform tasks related to daily living, compared to those receiving placebos. In addition, Lilly acknowledged an association between semagacestat and an increased rate of skin cancer.

Lilly said it would halt dosing of patients with semagacestat, although it will continue to monitor the drug's effects on those patients for at least six months. The company said development of another Alzheimer's treatment - the Phase II monoclonal antibody solanezumab - is unaffected by the pipeline decision. Phase III data on solanezumab are not anticipated until 2012.

Semagacestat is the most clinically advanced compound in a class of molecules that acts on the protease complex gamma secretase, which has been implicated in the production of sticky amyloid plaques characteristically found in the brains of Alzheimer's patients. Gamma secretase cleaves the amyloid precursor protein into smaller amino acid chains including the peptide amyloid beta, the main element of amyloid plaques and a major focus of Alzheimer's drug development (see ¹ Also see "Alzheimer's Start-Ups At A Crossroads Between Discovery And The Clinic" - Pink Sheet, 1 September, 2010. ).

The news is the latest reminder that Lilly faces very real challenges even as it attempts to solve its patent cliff. On August 13, a court ruled that Lilly's method-of-use patent on one of the its top sellers, Strattera (atomoxetine),is invalid, opening the door to generic competition (² Also see "Without Strattera, Will Lilly Merge?" - Pink Sheet, 13 August, 2010.).

To date, Lilly has remained focused on developing pure play pharmaceutical products. It has attempted to defray development risk and cost via mostly untested methods designed to speed clinical trials, as well as building a network of external R&D alliances. These efforts to buy time may not be enough, however, given the company's already thin late-stage pipeline is depleted further as a result of the semagacestat failure (³ Also see "Lilly Tries to Buy Time" - In Vivo, 1 December, 2009.).

"[Lilly] has disavowed doing bigger deals which implies it is counting on its pipeline to deliver," wrote Bernstein Research senior analyst Tim Anderson in an Aug. 17 research note. "Today's setback would seem to make this more difficult to achieve.

"We see [Lilly] possibly being forced into doing one or more fairly sizeable acquisitions to fill in its longer-term earnings gaps," Anderson added.

A Class-Wide Effect?

Phase II trials with semagacestat showed the gamma secretase inhibitor was able to lower amyloid beta levels in blood plasma and cerebrospinal fluid. But today's announcement "probably suggests some uncoupling between the anti-amyloid effect and effects on cognition," according to Alzheimer's Association chief medical and scientific officer Bill Theis.

Researchers continue to question whether attacking beta-amyloids, as Pfizer/Johnson & Johnson's humanized monoclonal antibody bapineuzumab does, holds the key to treating Alzheimer's, or whether amyloid build up is a symptom rather than a cause of the disease.

How deeply Lilly's announcement affects other developers of gamma secretase inhibitors remains to be seen. "An immediate question that comes to mind is whether this is unique to [Lilly's] drug, or the gamma secretase inhibitor class as a whole," Bernstein Research's Anderson noted.

Some projects that could be affected include Bristol-Myers Squibb's Phase II gamma secretase inhibitor BMS-708163, which is being examined in "pre-dementia" patients, Elan's Phase I candidate ELND006 and preclinical compound ELND007, and Satori Pharmaceuticals' unnamed preclinical program.

"It's not the end of GSI," Theis said, adding not enough compounds have produced clinical data to suggest whether the failure of Lilly's molecule will have a class-wide effect. He did, however, describe GSIs as "difficult to work with" because they produce multiple effects in the body. Theis also predicted a higher degree of molecular specificity will likely be required from a successful GSI drug.

Elan Chief Scientific Officer Dale Schenk added that Lilly's compound inhibits the enzyme completely, while more substrate-specific GSIs are being developed by Pfizer, Bristol-Myers Squibb and his own company. Newer inhibitors may be expected to exhibit superior safety profiles due to more specificity, he said.

But drug development around uncertain Alzheimer's targets remains deeply risky, as Credit Suisse analyst Catherine J. Arnold wrote in a research note. "Semagacestat's fall does illustrate the challenges that exist in developing a disease modifying drug for a disease that is not well understood, and why we do not estimate the probability of success for any given AD pipeline drug to be above 25 percent."

A Graveyard of Failures

Semagacestat is hardly the first Alzheimer therapy to fail in late stage trials.

In March, Pfizer and Medivation presented disappointing efficacy data from a Phase III study of Dimebon (latrepirdine). Its failure kept Pfizer from extending its Alzheimer's franchise past its acetylcholinesterase inhibitor Aricept (donepezil) in the near term, although Pfizer is still developing bapineuzumab, which it gained via its Wyeth acquisition, in conjunction with J&J (⁴ Also see "Prospects For Pfizer/Medivation's Dimebon Dashed By Phase III Flop" - Pink Sheet, 3 March, 2010.).

Another late-stage candidate, Flurizan (tarenflurbil), failed to show efficacy benefits for cognition or daily living activities, and was shelved by Myriad Genetics in June 2008 just one month after the compound was partnered to H. Lundbeck in a deal worth $100 million upfront (⁵ Also see "Lundbeck/Myriad Marriage: Short But Not Sweet" - Pink Sheet, 30 June, 2008.).

In what could be a triumph of hope over experience, Elan and Transition Therapeutics are basing their decision to proceed with Phase III trials of the beta amyloid aggregation inhibitor ELND005, despite failing to meet Phase II endpoints, on data showing an effect on beta amyloid protein in cerebrospinal fluid that for the dose with the fewest safety concerns.

Indeed, the field has been hampered by the lack of reliable biomarkers related to cognitive performance that definitively link treatment with improved cognition. A blood-borne biomarker for Alzheimer's would represent a much-needed breakthrough for measuring drugs' efficacy.

Tough Times For Lilly

The high late stage failure rate of Alzheimer's drugs has forced even the biggest pharmaceutical players to consider deal structures that allow them to share development risk. Lilly is no exception. In 2008 the pharma inked a deal with private equity fund TPG-Axon Capital in which the financier agreed to pay up to $325 million to fund Phase III trials on the drug in exchange for milestone payments and sales royalties. NovaQuest, an investment arm of contract research organization Quintiles, invested 10 percent of TPG's share in a side deal, and conducted the clinical trials on semagacestat (⁶ Also see "Alzheimer's Development Financing: Risky Therapies Call for Innovative Deals" - In Vivo, 1 September, 2008.).

The involvement of TPG-Axon and Quintiles is likely the silver lining in an otherwise stormy R&D cloud for Lilly. The semagacestat setback further hampers its ability to compensate for revenues that will be lost as its drugs go off-patent in the coming years. In 2011, the company will lose exclusive rights to the antipsychotic Zyprexa (olanzapine), which generated $4.9 billion in 2009 and represented 23 percent of its sales. Other billion-dollar drugs, including the antidepressant Cymbalta (duloxetine ) and oncology treatment Gemzar (gemcitabine ), will go generic by 2013.

Bernstein's Anderson wrote that Lilly "has the worst 'patent cliff'" of the nine big pharmas it tracks in the U.S. and Europe. Bertstein's current models show a decline of almost 50 percent in Lilly's earnings per share between 2010 and 2015, unless it can find another blockbuster. That could necessitate a costly acquisition, which Lilly has thus far avoided during the recent spate of pharma mega-mergers.

Approval seems likely this fall for Lilly's long-acting diabetes treatment Bydureon (exenatide), a Phase III candidate developed in conjunction with Amylin Pharmaceuticals and Alkermes. But Anderson described the company's Phase III pipeline as "relatively thin," with only a minor revenue impact anticipated if Cymbalta is approved as a pain reliever - a questionable outcome itself given the negative recent advisory committee review (see related item, "⁷ Recent FDA Advisory Committee Recommendations"). And sales of the 2009 introduction of blood thinner Effient (prasugrel) have proven slower than expected.).

- Paul Bonanos (⁸ p.bonanos@elsevier.com )

Lilly's Semagacestat Is Latest Alzheimer's Drug To Fail; Is Class At Risk?

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