Lilly’s Solanezumab Fails, But The Surprise Would Have Been Success

Eli Lilly & Co.’s high-profile anti-amyloid treatment solanezumab failed a third Phase III trial, EXPEDITION3, even though it was conducted in patients with milder Alzheimer’s disease and relied on a biomarker to test patients for amyloid. The trial failure, announced Nov. 23, was largely expected, but nonetheless casts another shadow over the field of research.

Lilly’s stock opened 15% lower at $64.34 on the news, as some investors had bought into the stock ahead of the catalyst in the event the data were positive, which would have resulted in substantial upside. Analysts and long-term investors generally considered Lilly’s attempt to run a refined Phase III trial testing solanezumab to be a high-risk bet, given that the drug failed two prior Phase III trials, EXPEDITION and EXPEDITION2, and because of the high number of Alzheimer’s drugs that have failed in late-stage trials.

“Driven by new product launches, we continue to expect to grow average annual revenue by at least 5% between 2015 and 2020.” – Incoming Lilly CEO David Ricks

Lilly said EXPEDITION3 did not meet the primary endpoint, a statistically significant slowing in cognitive decline among people with mild dementia due to Alzheimer’s disease who were treated with solanezumab versus placebo. The primary endpoint was measured by the Alzheimer’s Disease Assessment Scale-Cognitive subscale (ADAS-Cog).

Lilly changed the primary endpoint of the study earlier this year to the single cognitive assessment from the original co-primary endpoint that measured cognition and function. (Also see "Lilly's Leap Tests Investors' Faith In Solanezumab" - Scrip, 16 Mar, 2016.) Some investors took the change as a sign that the company was concerned about a weak outcome.

The trial results, including many secondary clinical endpoints, favored solanezumab, but the magnitudes of treatment differences were small, Lilly confirmed.

The company will not pursue a regulatory submission for solanezumab and will work with investigators to conclude the open-label extensions for all three Phase III trials. Lilly will evaluate the data further to determine the impact on development plans for solanezumab and other Alzheimer’s drugs in the pipeline. The firm plans to present more findings from the study on Dec. 8 during the Clinical Trials on Alzheimer’s Disease (CTAD) meeting.

While the news isn’t an enormous surprise, it still is a disappointment. There was hope that by targeting patients earlier in the course of their disease, and by confirming the presence of amyloid pathology via PET screening or cerebrospinal fluid testing, EXPEDITION3 would yield a different result from the two prior trials, which failed in 2012. Despite the risks, Lilly went on to initiate the third trial in 2013 after a pre-specified pooled analysis showed a statistically significant improvement in patients with mild disease. (Also see "Efficacy Signal For Lilly’s Solanezumab Stirs The Alzheimer’s Pot" - Pink Sheet, 15 Oct, 2012.))

There is evidence that the accumulation of amyloid plaque deposits in the brain contributes to Alzheimer’s, but the pathway has continued to confound drug makers as a therapeutic target.

What Does Failure Mean For Others?

Two other high-profile drugs are in late-stage development for Alzheimer’s, and investors will wonder what the results of EXPEDITION3 might mean for those investigational drugs: Merck & Co. Inc.’s small molecule selective beta secretase (BACE1) inhibitor verubecestat and Biogen Inc.’s aducanumab, a monoclonal antibody targeting beta amyloid.

Analysts were mixed about what the results might mean for other drugs in development and the broader amyloid hypothesis. Some like Bernstein Research analyst Tim Anderson advised caution about transferring the results of EXPEDITION3 onto other drugs.

“While Lilly’s, Biogen’s and Merck’s drugs all target the same protein, they all do it differently enough that there should not be much of a read-through from one drug to the other,” he said. “In the case of Lilly, we’ve said for a long time that they may have given too low of a dose, which could impact results. Lilly never seemed to have a great answer for why they picked the solanezumab dose they did.”

Credit Suisse analyst Vamil Divan agreed in a same-day note. “Given sola did appear to have a modest impact on cognition and some secondary clinical endpoints, we are not ready to dismiss the amyloid hypothesis at this time, but remain cautious on the likelihood of success for any of these pipeline opportunities in this high-risk area.”

However, Baird Equity Research’s Brian Skorney sounded an alarm, noting, “Today’s failure comes pretty close to a nail in the coffin for the beta-amyloid hypothesis.”

Leerink analyst Geoffrey Porges said that “this is a serious blow” for Biogen and other companies developing Alzheimer’s therapies. If all of the value of aducanumab were removed from Biogen’s valuation in Leerink’s model, Porges forecast that the company’s stock would be reduced in value by $37, or 10%. Still, he pointed to material differences between aducanumab and solanezumab, such as dose, trial design and the antibody itself.

“We believe investors will not completely discount the value of aducanumab,” Porges said.

Biogen’s stock opened 7.6% lower Nov. 23 at $293.82, though it made up ground during the day. Merck was mainly flat.

For Lilly, A Chance To Move Forward And Take Stock In Alzheimer’s

For Lilly, the news could represent a chance to clean the slate and move forward, as it heads out of an extended period of significant patent expirations. The company has several new drugs and near-term pipeline products to drive growth, like Trulicity (dulaglutide) for type 2 diabetes and Taltz (ixekizumab) for psoriasis, as well as up and comers like the CDK4/6 inhibitor abemaciclib for breast cancer and the JAK1/JAK2 inhibitor baricitinib for rheumatoid arthritis. (Also see "Can New Drugs Meet Lilly’s Revenue Goals If Solanezumab Fails?" - Scrip, 25 Oct, 2016.)

Incoming CEO David Ricks sought to assure investors that the company remains on track. “Lilly has strong growth prospects without solanezumab,” he said. “Driven by new product launches, we continue to expect to grow average annual revenue by at least 5% between 2015 and 2020.”

Nonetheless, the EXPEDITION3 failure is a step back for Lilly’s ambitions in Alzheimer’s. The company is investing heavily in the field with the hope of being the leading drug developer in the area. Lilly has a broad portfolio of Alzheimer’s drugs in clinical development that work through an array of mechanisms and the firm has suggested that it might be combination approaches that will eventually yield therapeutic benefits. (Also see "Lilly Poised To Lead In Alzheimer’s, But Success Depends On Solanezumab" - Pink Sheet, 14 Dec, 2015.)