UPDATE 3-Lilly drug may slow memory loss in mild Alzheimer's

* Decline slowed 34 pct among mild Alzheimer's patients

* Combined results of two failed trials

* Lilly shares close up 5.3 pct

(Adds doctor comment, disease incidence)

By Ransdell Pierson and Bill Berkrot

Oct 8 (Reuters) - Eli Lilly and Co said itsexperimental Alzheimer's drug led to a 34 percent reduction inmemory decline for patients with mild symptoms over a period of18 months, giving it potential ammunition to seek approval forthe medicine that showed no benefit in more advanced stages ofthe disease.

Shares of Eli Lilly rose as much as 5.6 percent on Monday,to levels not seen since April of 2008, as some investors wereencouraged that the improvement could warrant consideration fromthe U.S. Food and Drug Administration.

Lilly in August said the drug, solanezumab, did not meet theprimary goal of halting progression of the memory-robbingdisease in patients with mild-to-moderate symptoms in twolate-stage trials.

But while many rival compounds have been relegated to thescrap heap after similar failures, Lilly indicated at the timethat there were signs that solanezumab prevented cognitivedecline for people at an earlier stage of the disease.

On Monday, the company presented results on the drug pooledfrom the two large studies that focused only on those with mildAlzheimer's.

"Today's data supports the view that solanezumab may beactive in early Alzheimer's patients but that further clinicalwork will likely be needed prior to FDA approval of theproduct," said J.P. Morgan analyst Chris Schott, adding that anydrug that slows Alzheimer's would have "multibillion-dollarannual sales potential."

Some 5 million Americans and nearly 36 million peopleworldwide are believed to have the disease and its prevalence isexpected to grow as the world's population lives longer. By2050, the number of Americans aged 6 5 and older with Alzheimer'smay triple, according to the Alzheimer's Association.

Lilly badly needs new drugs to offset sales declines of itstreatments facing generic competition. Company executives saidthe new data could give solanezumab a fighting chance.

"Today there are no medicines that slow progression ofAlzheimer's and we think that ought to be considered as we gotalk to regulators," David Ricks, head of biomedicines forLilly, said in a telephone interview.

"We'll make the argument this data is important in view ofthe high unmet need. But ultimately it's the FDA's judgment tomake in terms of whether to let the drug on (the market) withthese data," Ricks said.


The newly released data did not show that solanezumaboffered protection against the loss of physical function.

But it will likely lend further credence to the theory thatAlzheimer's must be attacked early in the progression of thedisease for drugs to have an impact.

Dr. Ronald Petersen, director of the Mayo Clinic Alzheimer'sDisease Research Center in Rochester, Minnesota, threw out anote of caution about the drug's prospects.

"What you are seeing in the data is statisticallysignificant," he said. "But it's hard to say that this is goingto be meaningful clinically."

Dr. David Drachman, professor of neurology at the Universityof Massachusetts Medical School, questioned the significance ofpooled memory findings culled from failed studies.

"The data can not be regarded as significant," he said."They did not prove it works."

Initial data unveiled in August created doubts about whetherthe Lilly drug could be approved by the FDA without large newstudies. It followed disappointing results for Pfizer Inc's

and Johnson & Johnson's bapineuzumab, which alsofailed in pivotal studies. Both treatments block a proteincalled beta amyloid that forms plaque deposits on the brain.

"Our committee is encouraged by the results of thesolanezumab studies," Dr. Rachelle Doody, who presented the dataat the American Neurological Association meeting, said in astatement. "They support amyloid as a target for futureAlzheimer's research."

Doody, an Alzheimer's specialist from Baylor College ofMedicine in Houston, was a member of the steering committee forthe Alzheimer's Disease Cooperative Study that conducted anindependent analysis of the solanezumab data.

In one of the two Lilly studies called Expedition1, mildAlzheimer's patients experienced a 42 percent reduction indecline in cognitive function after 18 months of treatment,which was deemed to be highly statistically significant.

In the Expedition2 study, a 20 percent reduction seen incognitive, or memory, decline among mild Alzheimer's patientswas not statistically significant.

Lilly reached the 34 percent reduction by combining datafrom the two studies, which it said had been pre-planned and waslegitimate because the design of the two studies was nearlyidentical. By combining the studies, Lilly said, it had agreater number of mild Alzheimer's patients for purposes of dataanalysis.

Eli Lilly shares ended up $2.55, or 5.3 percent, at $50.78on the New York Stock Exchange.

(Reporting By Ransdell Pierson and Bill Berkrot; Additionalreporting by Toni Clarke in Boston; Editing by MicheleGershberg, Richard Chang, Maureen Bavdek and Tim Dobbyn)

((ransdell.pierson@thomsonreuters.com)(646 223 6030))