Big Pharma's high-risk pursuit of CNS gold faces major market doubts

Here's an interesting number for anyone interested in the risks and rewards of drug development: Two of every three analysts and fund managers recently queried by the ISI Group say they expect that new Alzheimer's drugs in late-stage testing at Eli Lilly and Pfizer/J&J will fail. 

The poll comes up in a broad look at Big Pharma's relentless pursuit of CNS gold by Bloomberg. The story starts off with a look at Roche's ($RHHBY) central nervous system picks, which include a mid-stage Alzheimer's drug as well as a shot at schizophrenia. Analysts have been pushing Roche to show that it can succeed in developing new drugs outside of the cancer arena. And the stakes spiked considerably last week when Roche tanked its high profile cholesterol drug after it failed to register efficacy in Phase III.

Drawn by the prospect that even a modest success against a disease like Alzheimer's will deliver Lipitor-sized rewards for years to come, pharma companies have been diving ever deeper. In Lilly's ($LLY) case, the push to complete a late-stage program for solanezumab follows the failure of semagacestat. But this time around Lilly says it has a better understanding of the disease. And Roche has ventured into the same arena, with four of its 10 brain drugs focused on treating the memory-wasting disease. Its Alzheimer's program--gantenerumab, which reduced amyloid in a small study--is now in mid-stage testing.

Not all pharma outfits are as bullish. Big setbacks in depression prompted AstraZeneca ($AZN) to restructure its CNS division, downsizing its staff and looking for outside partners to share the risk. GlaxoSmithKline ($GSK) famously decided to stay away from high-risk CNS drugs several years ago. And fresh reversals later this year could prove an even more painful setback for the field, where the high failure rate may force other companies to change tactics as well. 

"The central nervous system will remain the highest of the high-hanging fruit," Citigroup's Andrew Baum tells Bloomberg. And fewer hands will be reaching for it if the market turns even more skeptical about the odds of this game. Lilly, for one, is already in a weak position with one of the industry's weakest late-stage pipelines. Another blow could force major changes.

- here's the article from Bloomberg