A drug to slow Alzheimer's cruel march

NEW YORK (CNNMoney.com) -- No drug on the market can block Alzheimer's, but biotech Myriad Genetics has one in the works that may slow it down.

There are already drugs that treat the symptoms of Alzheimer's, like Aricept from Pfizer, Exelon from Novartis and Namenda from Forest Labs. These slow the memory deterioration that's caused by the disease.

But Myriad Genetics (up $1.25 to $41.20, Charts), Inc. could be the first company to develop a drug that targets the disease itself, not just the mental deterioration that accompanies it.

The Salt Lake City-based biotech, which draws much of its genetic data from the Mormons, is conducting a late-stage, 1,600-patient study on the experimental drug Flurizan, considered by analysts to be among the biggest drug studies ever. The study is focusing on Flurizan's ability to slow the progress of Alzheimer's. Results are expected in the first half of 2008.

The need for better Alzheimer's treatment is escalating. The disease, which deteriorates the minds of more than 4 million Americans, is expected to hit epidemic levels by 2015, as the population of aging baby boomers balloons.

Schering-Plough (Charts, Fortune 500), AstraZeneca, Elan, Wyeth (Charts, Fortune 500) and the privately-held Accera are all researching experimental Alzheimer's drugs, but Flurizan is considered the most advanced treatment in the industy's pipeline.

Myriad has a lot at stake with Flurizan, and investors are piling in as well, driving up the biotech's stock 20 percent so far this year. Flurizan appears to be the stock's big driver, analysts say.

William Ho, analyst for Bank of America, estimates that Flurizan approval could drive Myriad's stock up to $70 a share, from yesterday's close of $41.42.

"If they are successful in getting a disease modification label from the FDA, this is undoubtedly a multi-billion dollar drug," said Ram Selvaraju of Rodman & Renshaw, who believes that annual sales could peak at $4 billion.

Selvaraju said that Myriad could file a Flurizan application with the FDA as early as 2008. With a thumbs-up from the agency, the drug could be on the market in 2009, he said.

But the drug's failure would be a major blow to Myriad. The company also makes genetic diagnostic tests for various types of cancer and has other drugs in its pipeline, but Flurizan represents up to 80 percent of the company's valuation, said Selvaraju.

Flurizan would be used in combination with existing Alzheimer treatments according to analysts, so it has the potential to expand the overall market.

The Alzheimer's market is currently dominated by the blockbuster Aricept, from the drugmakers Pfizer Inc. (down $0.04 to $24.07, Charts, Fortune 500) and Eisai Inc. Aricept had $1.4 billion in fiscal year 2006 sales, but its patent expires in 2010.

That opens up the field for competing treatments, like Novartis' (down $0.35 to $54.46, Charts) Exelon, which totaled $525 million in 2006 sales, and Forest Labs' (down $0.06 to $39.24, Charts) Namenda, with $660 million in sales for Fiscal Year 2007.

Exelon was recently approved by the Food and Drug Administration in the form of a skin patch, which might make life easier for Alzheimer's patients, who have difficulty remembering to take complex drug cocktails. Aricept's status as a once-a-day pill helped the drug climb to blockbuster status.

Flurizan would also be a once-a-day pill, if approved, which is yet another reason that analysts are so bullish about it.

The analysts interviewed for this story do not own stock in the companies they discussed, though some of their firms make a market in those businesses.