Shares in Elan lost a third of their value in Dublin trading today after the company last night reported the Alzheimer's drug bapineuzumab it is developing with Wyeth was linked to a brain-swelling side-effect in a study.
Stock in Wyeth, the group's bigger US partner, fell 13 per cent by midday in New York.
"We believe that today's results leave unanswered questions about the efficacy profile of bapineuzumab," JP Morgan analyst Chris Schott said in a research note.
Elan shares were ended down 32 per cent at €14.02. Wyeth lost 13 per cent to $39.20, as Citi analysts cut the stock to "sell" from "hold" and other brokerages slashed price targets for the stock.
Despite the savage market reaction, Elan CEO Kelly Martin said he was more confident than ever in bapineuzumab and there were "zero plans" to change ongoing final Phase III tests.
"There are obviously some gaps between the market interpretation and what we know. As the CEO of Elan, I have some work to do to make sure that gap is filled. We will fill it very aggressively over the next month, two or three," he said.
Last night’s research release at the US at the International Conference on Alzheimer's Disease in Chicago showed the treatment had no effect on patients with a gene known as ApoE4, which is found in about half of Alzheimer's patients.
The update on the antibody medicine, also known as AAB-001, has been closely watched by investors. If proven to work, the drug could be the first to modify the course of Alzheimer's disease, rather than just offering symptom relief.
Twelve people with mild-to-moderate Alzheimer's who were treated with the drug, developed a build-up of fluid in the brain called vasogenic edema, researchers told the conference.
Ten of those cases were in people who have the ApoE4 gene, which significantly raises their risk of developing Alzheimer's disease.
Preliminary findings released last month showed the drug failed to boost memory and functionality in most of 234 patients over 18 months.
Carriers of ApoE4, 60 per cent of those who got the drug and 70 per cent who got the placebo, did not show any improvement in their ability to think or function.
But among people who had different versions of the ApoE gene, the companies did find a statistically significant improvement in these measures.
When they looked at people do not carry the gene and who completed the study, "we have absolutely dynamite data," said Dr Sid Gilman of the University of Michigan, who helped work on the study.
"There is a very strong signal among non-carriers, suggesting a beneficial effect," Dr Gilman told the meeting.
Other experts were cautious. "You can't conclude anything about the efficacy of the drug from this trial," said Dr Ronald Petersen of the Mayo Clinic in Rochester, Minnesota.
"It's a secondary analysis. You have to go with what they pre-specified and what their endpoints were, and they didn't make those," said Dr Petersen, incoming chairman of the Alzheimer's Association's scientific board and chairman of a safety monitoring board for a therapeutic vaccine Wyeth and Elan are working on for Alzheimer's.
The companies decided to conduct larger studies aimed at proving bapineuzumab worked in ApoE4 non-carriers, who make up about half of all Alzheimer's patients, Dr Ronald Black, assistant vice president in neuroscience research at Wyeth, said.