UPDATE 2-Lilly drug may help 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 analyst, researcher comment, study details)

By Ransdell Pierson and Bill Berkrot

Oct 8 (Reuters) - Eli Lilly and Co said its experimental Alzheimer's drug led to a 34 percent reduction in memory decline for patients with mild symptoms over a period of 18 months, giving it potential ammunition to seek approval for the medicine that showed no benefit in more advanced stages of the disease.

Shares of Eli Lilly rose as much as 5.6 percent in Monday trading, sending the stock to levels not see since April of 2008, as some investors were encouraged that the improvement could warrant consideration from the U.S. Food and Drug Administration.

Lilly in August said the drug, solanezumab, did not meet the primary goal of halting progression of the memory-robbing disease in patients with mild-to-moderate symptoms in two late-stage trials.

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

On Monday, the company presented results on the drug pooled from the two large studies that focused only on those with mild Alzheimer's.

"Today's data supports the view that solanezumab may be active in early Alzheimer's patients but that further clinical work will likely be needed prior to FDA approval of the product," said J.P. Morgan analyst Chris Schott, adding that any drug that slows Alzheimer's would have "multibillion-dollar annual sales potential."

Lilly badly needs new drugs to offset sales declines of its treatments facing generic competition. Company executives said the new data could give solanezumab a fighting chance.

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

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


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

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

Dr. Ronald Petersen, Director of the Mayo Clinic Alzheimer's Disease Research Center in Rochester, Minnesota, threw out a note of caution about the drug's prospects.

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

Initial data unveiled in August created doubts about whether the drug could be approved by the FDA without large new studies. It followed disappointing results for Pfizer Inc's and Johnson & Johnson's bapineuzumab, which also failed in pivotal studies. Both treatments block a protein called beta amyloid that forms plaque deposits on the brain.

"Our committee is encouraged by the results of the solanezumab studies," Dr. Rachelle Doody, who presented the data at the American Neurological Association meeting, said in a statement. "They support amyloid as a target for future Alzheimer's research."

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

In one of the two Lilly studies called Expedition1, mild Alzheimer's patients experienced a 42 percent reduction in decline 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 in cognitive, or memory, decline among mild Alzheimer's patients was not statistically significant.

Lilly reached the 34 percent reduction by combining data from the two studies, which it said had been pre-planned and was legitimate because the design of the two studies was nearly identical. By combining the studies, Lilly said, it had a greater number of mild Alzheimer's patients for purposes of data analysis.

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

(Reporting By Ransdell Pierson and Bill Berkrot; Additional reporting by Toni Clarke in Boston; Editing by Michele Gershberg, Richard Chang, Maureen Bavdek and Tim Dobbyn)

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