Failed Alzheimer's Trial Slaughters Elan

Poor drug trial results sent the stocks of three companies down Tuesday morning when an experimental Alzheimer’s treatment failed in the first of four big studies.

Pfizer, Johnson & Johnson and Elan Corp.’s bapineuzumab failed to improve the symptoms of dementia in its first big study. In this study, patients had a gene that made them more likely to get the disease. Other studies will focus on patients without the high genetic risk.

Of the three companies, Elan was hit the hardest, plummeting 15% at the opening bell. By midday the stock was trading at $11.50. Meanwhile, Pfizer and Johnson & Johnson fared a little better, dropping slightly more than 1%.

Elan Corp. stock on July 24, 2012

However, the failure wasn’t totally unexpected; researchers haven’t been too optimistic about the drug’s chances. An earlier ISI Group survey of more than 200 analysts revealed that two-thirds expected the drug to fail.

Eli Lilly, which is developing a drug similar to bapineuzumab, also fell in morning trading. By noon Lilly’s stock was down 5%. The same ISI survey revealed that Lilly’s drug is expected to fail too.

In May, Lundbeck’s experimental Alzheimer’s drug showed positive results, achieving significant improvement in cognition in a Phase II trial.

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