Does Lilly have enough on Alzheimer’s drug?

After Eli Lilly and Co. found a “glimmer of hope” in its test of its experimental Alzheimer’s drug, doctors and stock analysts generally concluded the company needs to conduct another long clinical trial to prove the drug’s effect.

But one stock analyst thinks Lilly already has what it needs to ask for approval for its drug.

Catherine Arnold, a pharmaceutical analyst at Credit Suisse in New York, said it’s at least “plausible” that Lilly would file for market approval of the drug, solanezumab, which around the halls of Lilly’s Indianapolis headquarters is known simply as “sola.”

“Filing is plausible for sola given company’s announcement that cognitive benefits were achieved in the mild [Alzheimer’s population], assuming biomarker data is consistent,” Arnold dashed off in an Aug. 24 research note, shortly after Lilly released clinical trial results for sola that showed “statistically significant” slowing of cognitive decline in patients with a mild form of Alzheimer’s disease.

By biomarker data, Arnold means the results of blood and spinal fluid tests that Lilly has done with patients taking sola. In earlier trials, patients taking the drug showed higher levels of molecules made up sola and the amyloid protein, which sola is designed to clear out of the brain.

Alzheimer’s disease appears to be caused, at least in part, by excessive production or failure to clear away amyloid in the brain. The amyloid proteins stick together easily, forming clumps and then plaques, either of which can block the functioning of neurons.

The brain’s neurons eventually die and patients’ brains start losing memory and, eventually, their ability to control basic motor functions.

Also, Lilly used brain scans of patients to see if the size of amyloid plaques in patients’ brains were affected by sola.

Arnold bases her prediction on previous comments by Dr. Russell Katz, director of the division of neurology products at the U.S. Food and Drug Administration. In an interview in April, Katz was asked if the FDA would approve an Alzheimer’s drug that showed “a subtle clinical change in conjunction with an effect on a surrogate or even multiple surrogate markers.”

The phrase “surrogate markers” is synonymous with biomarkers, and refers to quantifiable tests of blood, fluids or imaging scans.

Katz’s response? “Yes, we are open to that.”

Based partly on this hope, Arnold raised her rating on Lilly and her expectations for its stock price. She predicts it will hit $53 per share soon, up from her previous prediction of $41 per share.

Sola would be enormously lucrative for Lilly because there are no drugs on the market that slow the progress of Alzheiemer’s disease. Arnold estimates Lilly could charge $7,000 per patient per year for the drug in the United States, and $5,200 per patient per year in Europe.

If taken only by mild patients, which make up about 40 percent of the 18 million people worldwide who suffer from Alzheimer’s disease, Arnold predicts the drug could reach $3.5 billion in sales by 2020.

Other analysts, who think in the absence of other options that the first drug on the market will be given to all manner of Alzheimer’s patients, predict sola could reach $9 billion in annual sales.

But most think Lilly will have to spend more time and money before it truly has a shot at those sales. Another Phase 3 clinical trial would likely cost more than $100 million, according to research by the Tufts Center on Drug Development.

“Lilly will likely have to do another Phase-3 trial, most likely in just mild patients or earlier who are more likely to respond,” BMO Capital Markets analyst Alex Arfaei wrote in an Aug. 24 research note. “Sola is most likely not dead, but it is likely delayed to 2017-2018 and will likely be applicable to a smaller subset of AD patients.”

Doctors interviewed about sola sounded similar thoughts.

“I take care of people with Alzheimer’s disease who desperately want to see something positive here,” Dr. David Knopman, a neurologist at Mayo Clinic in Rochester, Minn., told Bloomberg News. “For my patients right now, absolutely it won’t be available commercially. I don’t want them thinking this is something being withheld by a ‘nasty’ Food and Drug Administration, or that the scientists are being too cautious. This was a negative study.”

Indeed, Lilly’s studies of sola in 2,050 patients in 16 countries failed their primary goals of slowing Alzheimer’s disease in both mild and moderate patients. Also, Lilly found no slowing, even among mild patients taking sola, in their declining ability to do daily activities, which is another key impact of Alzheimer’s disease.

Lilly has given its raw data from the sola trials to academic researchers, who will announce their own conclusions on Oct. 8 at a conference of the American Neurological Association. In the meantime, Lilly officials will begin conversations with regulators at the FDA and at similar authorities in other countries.

But Lilly officials remain mum on whether they will ask for market approval or do another study.

Dave Ricks, president of Lilly’s Bio-medicines business unit, said Lilly has not given up on sola and in fact feels like the drug is a lot less risky now than most thought it was.

“I personally think the risk is different today than it was on Wednesday,” Ricks said Aug. 24 at Lilly’s headquarters. He also said the positive signal from sola reaffirms Lilly’s strategy of pursuing some high-risk medicines—even though its recent record of launching new drugs has not been stellar.

“Our overall mood, we feel good. We feel good in our overall strategy,” Ricks said.