AFFiRiS' press release read like a monumental scientific discovery:
Breakthrough in Alzheimer's disease: AFFiRiS halted clinical progression in Alzheimer patients upon treatment with AD04 in a phase II clinical study
There's just one catch: AD04 was actually the placebo for the clinical trial.
It's not your typical sugar pill, though. The company was testing an Alzheimer's disease vaccine, which contained a peptide that the patient was supposed to make antibodies against and an adjuvant to increase the immune response. The placebo control contained only the adjuvant, which seemed like a reasonable control, since AFFiRiS believed it was the antibodies to the specific peptide that would help the patient.
Instead, the adjuvant alone performed better than the peptide plus the adjuvant. GlaxoSmithKline (NYSE:GSK) has shown that an adjuvant can stimulate the immune system to clear plaques in mouse models for Alzheimer's disease, so the finding has some scientific justification.
While the findings may be real, there's no explanation for why the peptide would decrease the effect of the adjuvant. AFFiRiS obviously has to test AD04 in a well-controlled trial with a true placebo.
As senior biotech specialist Brian Orelli and health-care analyst David Williamson discuss in the following video, investors should be careful investing in companies developing Alzheimer's disease drugs, since we don't really know the underlying cause of the disease. If you really want to invest in Alzheimer's disease drugs, the guys suggest you consider investing in Eli Lilly (NYSE:LLY), Merck (NYSE:MRK), or Biogen Idec (NASDAQ:BIIB), which all have Alzheimer's disease drugs but are large enough that they won't drop much if their Alzheimer's drugs fail. Of course, that means you'll want to own Eli Lilly, Merck, or Biogen Idec for their other drugs and just have the Alzheimer's drugs to offer upside potential.