Drugmakers prospect for Alzheimer's gold

Whoever takes the first Alzheimer's-blocking drug to market stands to make billions of dollars.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Alzheimer's patients are in dire need of a disease-stopping drug, and the company that comes up with one could harvest tens of billions of dollars in annual sales.

There are already plenty of drugs in the $4.5 billion pharma market for the mind-eroding disease. But those drugs are considered "symptomatic," which means they don't stop the progression of Alzheimer's. Medical experts are hoping that an effective "disease modifying" drug emerges before the aging Baby Boomer population expands Alzheimer's to epidemic proportions.

"There's a huge demand for drugs that actually influence the course of the disease," said Ian Sanderson, an analyst at Cowen and Co. "[The current drugs] do nothing to stave off the decline of the neurotransmitters. They just make what's left work better. They don't target the underlying cause of the disease. "

More than five million Americans have Alzheimer's, which gradually erases the memory of its elderly patients. The current stock of symptomatic drugs includes industry leader Aricept, a blockbuster from Pfizer (PFE, Fortune 500) and Eisai with $2.5 billion in annual sales, as well as Novartis' (NVS) Exelon and Johnson & Johnson's (JNJ, Fortune 500) Razadyne, also known as Reminyl.

"[There are] lots of very exciting new drugs in the pipeline that take radically different approaches to current drugs," said Dr. Mark Gluck, professor of neuroscience at Rutgers University and co-director of the Memory Disorders Project at Rutgers-Newark, in an email. "Rather than just treating symptoms, the new drugs in development attempt to arrest the creation of the plaques that destroy brain cells."

Two biotechs, Myriad Genetics (MYGN) and Elan (ELN), are experimenting with new compounds to try and slow Alzheimer's progression. These drugs target the amyloid plaque in the brain that is associated with the disease.

Myriad, whose stock surged 47 percent in 2007, is considered a front-runner in developing a "disease modifying" drug. The biotech is conducting the largest study ever for Alzheimer's treatment with its experimental drug Flurizan. Myriad hopes to wrap up its 18-month, late-stage study of nearly 1,700 patients by March 2008, and to file an application to the Food and Drug Administration in the fall.

Ian Sanderson, analyst for Cowen and Co., said that Flurizan will probably the first among the next generation of Alzheimer's drugs to go before the FDA. He believes it could reach $600 million in annual sales by 2012 and would eventually peak at $1.2 billion.

Elan, whose stock jumped 60 percent in 2007, is next in line to develop a disease-blocking drug. The Irish company, working in conjunction with U.S.-based Wyeth (WYE, Fortune 500), is entering late-stage tests for its experimental treatment bapineuzumab, also known as AAB-001.

Corey Davis, analyst for Natixis Bleichroeder projects that AAB-001 will quickly reach blockbuster levels after its 2010 market debut and will hit nearly $10 billion in annual sales within five years of its launch, the proceeds of which would be split between Elan and Wyeth.

"If this is truly a disease-modifying agent, which all the signs are pointing towards, it's a big deal," said Davis. "Who wouldn't go on it?"

Davis believes that AAB-001 could exceed $14 billion in annual sales by 2017. This would break the record set by Pfizer's Lipitor, the top-selling drug of all time, which fell just short of $13 billion in sales in 2006.

Davis based his AAB-001 projections on an annual minimum price of $25,000 for the drug as well as heavy penetration in an expanding Alzheimer's population, assuming that "this drug can truly alter the progression of the disease."

But UBS analyst Roopesh Patel urges caution in assigning such heady projections for AAB-001. In a November report that he co-authored, Patel said that AAB-001 could achieve $20 billion in annual sales within five years of its launch, but the chances are very slim.

Patel described Alzheimer's research as a high-risk venture "littered with failed compounds."

It remains to be seen whether there will ever be an actual cure for Alzheimer's. Davis, the analyst for Natixis Bleichroeder, said that any drug that "melts" the amyloid plaque in early-stage Alzheimer's patients "would amount to a cure, because it would halt the disease before it starts."

According to him, early studies with AAB-001 demonstrated the ability to melt amyloid plaque in animals, but results of later-stage human studies have not yet been made public.  To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.