Are Alzheimer’s Drugs Catalyzing These Stock Prices?

The cure is still unknown for those suffering from Alzheimer’s. But do drug-makers have promising products in the pipelines?

In the past month, trials conducted by pharmaceutical giants Pfizer (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) were suspended. In addition, Eli Lilly (NYSE:LLY) halted development of drugs that would attack the toxic protein known as beta amyloid that affects the brain of those afflicted with the disease.

The failures question the widely held belief that beta amyloid causes Alzheimer’s disease. Moreover, halting research of anti-amyloid drugs places future research strategies in question.

Let’s analyze this news with the most relevant aspect of our CHEAT SHEET framework:

C = Catalyst for a stock’s movement

Eli Lilly does not consider the negative trial results of its drug solanezumab to be the end of the amyloid hypothesis. In fact, results were over-all better than many researchers and investors had hoped.

In the two clinical trials of 2,000 patients with mild to moderate Alzheimer’s, no significant decline in cognition was noted. When the results from the two groups were tabulated together, researchers found a “statistically significant slowing in the decline of cognition” for patients with a mild rather than moderate condition.

The data was significant enough for Sanford C. Berstein & Company analyst Timothy Anderson to term top line results that “leave more possibilities than consensus expected.”

Stock prices rose for Lilly following the release of its reasearch data in late August, rising 3.44 percent to $43.86 per share. Also, Catherine Arnold of Credit Suisse upgraded Lilly to outperform.

Yet the future for solanezumab and other similar drugs is far from certain.

Dr. Samual E. Gandy, director of the Center for Cognitive Health at the Mount Sinai School of Medicine in New York, was hesitant. “The bottom line for solanezumab, based on what we have heard so far,” he said to the New York Times, “would have to be ‘maybe,’ not ‘promising’.”

Detractors of solanezumab argue that further trials are needed before approval. Furthermore, Lilly’s results do not confirm how significant the slowing of cognitive decline was in the trials, a figure the company will give at medical conferences in October.

If Lilly’s data fails to impress the medical community, the door will be left open for developing drugs for preclinical Alzheimer’s, which many researchers believe is a more appropriate target. For now, new trials for solanezumab are being planned at Lilly.

Given the increased uncertainty over these Alzheimer’s treatments, we cannot currently consider these drugs as imminent “Catalysts for a stocks movement.” Therefore, we recommend removing them from your analysis as strong reasons why Eli Lilly, Pfizer, or Johnson & Johnson shares would significantly move in the near future.

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