Forget What Your Drug Was Approved For

You may not be able to teach old dogs new tricks, but drug companies can certainly try to get old drugs approved for new indications.

Baxter (NYSE: BAX  ) is partnering with the Alzheimer's Disease Cooperative Study Group to see whether its Gammagard Liquid can be used to treat the dreaded neurodegenerative disorder. The company announced that it plans to proceed with a phase 3 clinical trial, after interim results of an ongoing 24-person phase 2 trial looked promising. The full results from that trial should be available later this year, and the phase 3 clinical trial should begin enrolling patients next year.

Gammagard Liquid is essentially antibodies purified from human plasma. It has been used to treat immunodeficiency conditions for almost 30 years.

Baxter hopes that the antibodies in Gammagard Liquid will attack and clear out beta-amyloid plaque in the brain, which many researchers believe is the cause of Alzheimer's disease. Elan (NYSE: ELN  ) and partner Wyeth (NYSE: WYE  ) have been developing specialized antibodies to do the same thing, one of which is headed for a phase 3 trial later this year. Gammagard Liquid, however, contains natural antibodies made by the human body, and therefore might work better than those designed in a laboratory.

Unfortunately, human plasma is in short supply. Even if other makers of intravenous immunoglobulin (IVIG), such as Omrix Biopharmaceuticals (Nasdaq: OMRI  ) , were approved to treat Alzheimer's disease, I doubt enough drug could be produced to treat the estimated 5.1 million Americans who have the disease, as well as all the other diseases that IVIG is used to treat. In addition to availability problems, Gammagard is also likely to be expensive compared with lab-produced antibodies.

The best hope for patients is that Gammagard is found to be effective at reversing the disease, and that researchers are subsequently able to determine which antibodies in Gammagard are responsible for the positive effects. Those antibodies could then be formulated into a lab-made drug.

In the meantime, I'm not sure that Baxter will benefit that much from a positive clinical trial result. The increased demand might allow it to command a higher price tag for Gammagard for a while, but ultimately, a drug specifically for Alzheimer's disease will replace Gammagard. The antibodies that replace Gammagard could be purified from almost any IVIG product, so a FDA approval doesn't give Baxter researchers much of an advantage. Baxter seems to realize that its potential benefit is rather small, since it's convinced the National Institutes of Health to pick up part of the tab for the phase 3 trial.

Omrix is a recommendation of the Rule Breakers newsletter. Grab a 30-day free trial to take a look at all our past issues and see why we've recommended it.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy ties a string around its finger.