Is Lilly betting the farm on its high-stakes Alzheimer's gamble?

Now that the patent cliff has arrived right on time for Eli Lilly ($LLY), the big question this year is whether or not its massive gamble on the Alzheimer's drug solanezumab will pay off. That's Reuters' theme as it delves into the murky science involved in trying to treat the memory-wasting ailment. And even the most optimistic projections can't hide the fact that Lilly may be betting the farm on a drug that faces incredibly long odds.

What are the stakes here? JP Morgan analyst Chris Schott has noted that without a late-stage win for solanezumab, Lilly will not be able to "meaningfully offset the loss of its core franchises to generic entry." Even marginal gains for patients would deliver a drug franchise worth billions a year. His odds for success: Low.

While rivals have gone all out on the M&A side, Lilly CEO John Lechleiter (photo) has maintained an unwavering faith in the company's R&D division, vowing that Lilly scientists will deliver the new products needed to grow the company. And as Lilly repeatedly failed to deliver on the blockbuster side of the business, the importance of solanezumab has grown accordingly.

The big problem, say the experts, is that there is an imperfect understanding of what causes the disease and how to treat it. Lilly and a Pfizer/J&J partnership, which is pursuing its own dreams with bapineuzumab, think they have the inside track.

"I personally think the chances are almost zero," Duke's Dr. P. Murali Doraiswamy, an Alzheimer's expert, tells Reuters. The trouble, he adds, is that investigators are testing drugs on people who already show symptoms of the disease.  

Investors, meanwhile, are left with an upcoming release this year that will either pour cold water on yet another Lilly hopeful or ignite a rally that could transform the company's share price. That's a big gamble. And the outcome is likely to either continue to spur an exodus out of neuroscience, or to spark a revival for a flagging field.

- here's the Reuters story

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