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Eli Lilly Might Have an Alzheimer’s Cure
LLY stock set to soar Friday on favorable drug trial
By Jeff Reeves, Editor of InvestorPlace.com | Aug 24, 2012, 9:03 am EST

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Big news today from Eli Lilly & Co. (NYSE:LLY) — according to reports, the company proved “a statistically significant slowing of cognitive decline in patients with mild Alzheimer’s disease.”

Lilly stock is up 8% in early trading as a result of this potential Alzheimer’s prevention drug known as solanezumab. But forget what this means for Big Pharma; it’s a huge deal if true for the millions of older Americans facing the threat of this disease.

There is a catch: The solanezumab Alzheimer’s drug apparently did not show as much success in patients already in moderate cognitive decline, according to Eli Lilly. In other words, it’s more of a preventative measure for early-stage patients than a cure for those who already suffer dementia.

Another red flag was that adverse affects did crop up including lethargy, malaise and even angina. The solanezumab trial included 2,050 patients in 16 countries, and Eli Lilly’s Alzheimer’s drug was compared with a placebo.

However, the difficulties in treating advanced Alzheimer’s disease and the side effects don’t appear to be deal-breakers for Eli Lilly, and the FDA could very well be pleased with the results considering the pressing need for some kind of cure.

From an investor perspective, Lilly needed this. Its Q2 net profit fell 23% in July because of patent expirations, and a pipeline of new drugs like this solanezumab Alzheimer’s medication are key to future growth.

That’s true for all of Big Pharma, as patent expirations can absolutely devastate a drug’s sales. And for pharmaceutical stock investors, recent developments have been encouraging proof that the old guard aren’t just going to die out as generics take over.

Consider that another pharma stock, Merck & Co. (NYSE:MRK), popped almost 15% in about a month thanks to its osteoporosis treatment, odanacatib. The drug prevents fractures in brittle bones and just finished a successful Phase 3 trial.

The Lilly breakthrough is particularly good for Big Pharma considering a very public setback earlier this month of another Alzheimer’s drug, bapineuzumab — a joint effort from Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and Irish biotech Elan (NYSE:ELN).

Only time will tell how effective this drug will be in the long term and how many patients it will help. But for the time being, there are some signs of hope for those suffering from Alzheimer’s — and their families.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at [e-mail] or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own any of the stocks named here.