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Bapineuzumab, the potential megablockbuster Alzheimer's treatment, is dead. Not surprisingly, the drug failed another clinical trial, and Pfizer (NYSE: PFE ) and Johnson & Johnson (NYSE: JNJ ) have decided to discontinue the phase 3 program.
The winner here? Elan (NYSE: ELN ) . Sure the biotech still had a stake in bapineuzumab and shares were down more than 12% on the news today before paring those losses a bit. But it could have been worse.
Elan used to own half of bapineuzumab, but sold half of its stake in the drug to Johnson & Johnson. As part of the deal, Johnson & Johnson funded the first $500 million of its share of the development costs and picked up half of the costs beyond that. Johnson & Johnson also invested $885 million in Elan for $8.25 per share, which provided an infusion of cash that helped get its finances in order.
If Elan is a winner, then obviously Johnson & Johnson is the big loser in all this. Part of the attraction to Elan was a side deal that could have put it in the driver's seat to buy Biogen Idec (Nasdaq: BIIB ) , but that got thrown out in court. Considering how weak the phase 2 data was, Johnson & Johnson took a big risk that didn't pay off. On the plus side, its stake in Elan is up about 30%, which should help fund some of the development costs.
We can give Pfizer a pass on this one. It inherited bapineuzumab through the acquisition of Wyeth, but the drug was more gravy than a motivating factor for the purchase. Besides finding a sucker to buy some or all of the rights to its half of the drug, there wasn't much Pfizer could do.
Eli Lilly (NYSE: LLY ) is an innocent bystander in all this, but its stock is down a few points today because it has an Alzheimer's drug, solanezumab, that works in much the same way as bapineuzumab. Any remaining hope in solanezumab seems to be rapidly fading.