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What happened

After releasing disappointing results from a late-stage clinical trial, shares of pharma giant Eli Lilly (NYSE:LLY) fell by more than 12% as of 11:15 a.m. EST on Wednesday.

So what

The trial in question was called EXPEDITION3. This study was testing Lilly's experimental compound solanezumab as a hopeful treatment for mild dementia due to Alzheimer's disease. Solanezumab is a compound that is designed to reduce the amount of amyloid plaque that accumulates in the brain, which some scientists believe is linked to the development of Alzheimer's disease. Lilly had high hopes that this compound could turn into a megablockbuster drug that would offer hope to the millions of patients around the world that suffer from this awful disease.

Unfortunately, top-line results from the trial showed that patients who used solanezumab did not experience a statistically significant slowing of cognitive decline when compared to patients who only received a placebo. As a result, Lilly has decided not to move forward with regulatory submission.

Dr. John Lechleiter, Eli Lilly's CEO, expressed his disappointment with the data, stating, "The results of the solanezumab EXPEDITION3 trial were not what we had hoped for and we are disappointed for the millions of people waiting for a potential disease-modifying treatment for Alzheimer's disease."

Management stated that the study's outcome will result in a fourth-quarter charge of roughly $150 million, or approximately $0.09 per share. The company plans on holding a conference call with investors on December 15 to share more details about the trial, and announce its 2017 financial guidance.

Now what

This news comes as a huge blow to patients and investors alike. Time has shown that developing new treatments for Alzheimer's disease has been incredibly difficult, and Lilly's solanezumab was one of the more promising near-term options.

Despite the setback, Eli Lilly's incoming CEO David Ricks did his best to provide investors with a bullish case for owning the company's shares, stating: "Driven by new product launches, we continue to expect to grow average annual revenue by at least 5 percent between 2015 and 2020. Over that time frame, we also expect to increase our margins and provide annual dividend increases to our shareholders."

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