Eli Lilly halts development of Alzheimer's drug

Drugmaker Eli Lilly and Co. has stopped developing a potential Alzheimer's disease treatment in late-stage testing after patients taking the drug fared worse than those on a placebo.

The Indianapolis company said Tuesday the potential treatment, semagacestat, also did not slow the progression of Alzheimer's and was tied to an increased risk of skin cancer.

Lilly said early results from two late stage-trials showed that patients taking the drug saw their cognition, or memory and reasoning skills, and their ability to complete daily living activities like getting dressed worsen "to a statistically significantly greater degree" than patients taking a placebo.

Lilly still has another potential Alzheimer's treatment in late-stage testing, and the drugmaker said this decision will not affect that drug.

The drugmaker said the decision to halt semagacestat's development will result in a third-quarter charge to earnings of between 3 and 4 cents per share.

The decision also ratchets up pressure on the company's pipeline of drugs under development to produce new revenue sources.

Lilly faces patent expirations for several top-selling drugs in the coming years, which will expose them to cheaper generic competition. Its best-seller, the anti-psychotic Zyprexa, loses patent protection next year.

Last week, Lilly also learned a U.S. District Court judge ruled a patent protecting the attention deficit hyperactivity drug Strattera was invalid.

Shares of the drugmaker slipped 2.3 percent to $34.75 in premarket trading.