It's a tough call for investors.

With the clinical trial failure rate for Alzheimer's drugs an astounding 99.6%,  major drugmakers have seen one promising Alzheimer's treatment after another fail. The list include Bapineuzumab (Pfizer/Johnson & Johnson), Flurizan (Myriad Genetics), and Elan's vaccine--all once seen as promising approaches to treating the disease.

Still, those who have close family members with Alzheimer's, as I do, are acutely aware of the disease's devastation. A new slate of drugs is badly needed, but it won't happen unless drugmakers keep paying the tab for research.

Right now, there is no drug which can halt or even slow the progression of any form of dementia. That's a huge tragedy because Alzheimer's (and other forms of dementia) have been accurately described as a "global disaster waiting to happen." According to the World Health Organization, there are almost 8  million new cases of dementia a year. This is a staggering growth rate, and is the same size as the populations of Switzerland and Israel.

It's hard to put a dollar figure on the value of an actual Alzheimer's cure, but the direct cost of disease in America alone is $214 billion a year , with the average annual rate for nursing home care at $83,000 annually. Deutsche Bank recently stated that a cure would be worth $20 billion,  but that seems a gross underestimate. Already, $10 billion a year is spent on Alzheimer's drugs that don't help much if at all.

Old assumptions about Alzheimer's aren't panning out
Ten years ago, there was great confidence that a cure to Alzheimer's would be found. The main target of R&D for the past decade has been the buildup of plaque (amyloid beta) often found clustered in the brains of Alzheimer's patients. While initial animal studies demonstrated a clear improvement in cognition with brain plaque clearing drugs, confirming those results on human patients has proven all but impossible.

There is now some question as to whether the plaque clusters are even to blame for the disease, making it clear how little we understand about what causes Alzheimer's to begin with.

Alzheimer's drugs in developmental stages
I'm not making any predictions, but those willing to do plenty of homework may find some interesting plays among the smaller caps in the Alzheimer's space. A small-cap that's getting lots of attention is Acadia Pharmaceuticals (NASDAQ:ACAD). Acadia's drug Pimavanserin may someday prove useful for psychosis in Alzheimer's patients, as discussed in a Motley Fool article by Todd Campbell. More recently, George Budwell pointed out heavy short interest as the drug gets closer to regulatory filing for its experimental treatment--which has a more direct application to Parkinson's. Acadia also has drugs in development for glaucoma and chronic pain.

Sangamo BioSciences' Alzheimer's drug is still in phase 2 testing, but it appears to have potential. The nerve-growth factor delivers a therapeutic protein to brain nerve cells that would otherwise be destroyed by Alzheimer's. Sangamo also has a gene therapy HIV drug in Phase II, and the company is something of a darling of biotech stock gurus such as David Sobek. There's also an independent study of a small-cap with an interesting Alzheimer's candidate in the peer-reviewed journal, Proceedings of the National Academy of Sciences.

It should be noted that these companies are high risk, and they have little to fall back on if things don't pan out.

A different line in Alzheimer's research is being followed by Valeant, which of course is not a pure play on Alzheimer's by any means. Recently, the cancer drug Bexarotene, licensed by Valeant, has shown some improvements in cognition in animal studies.

Other pharmas with Alzheimer's drugs in late-stage development include AstraZeneca and Merck. Both have oral drugs known as BACE inhibitors. ISI analyst Mark Schoenebaum believes Merck is perhaps six months ahead of AstraZeneca, but phase 3 data for either company's drugs is not likely to emerge until 2017.

A major drugmaker that has suffered multiple setbacks with Alzheimer's research is Eli Lilly (NYSE:LLY). Lilly decided to double down instead of throwing in the towel with its much-publicized experimental Alzheimer's drug. The drug, Solanezumab, failed phase 3 trials with advanced Alzheimer's patients. Instead of giving up, Lily started pursuing a large-scale phase 3 clinical trial for earlier-stage patients. Many are skeptical and consider it a desperation move by Lilly, especially since Solanezumab was originally touted as Lilly's great hope of overcoming its patent cliff.

The FDA lowers the bar
The failure rate with drugs in the dementia pipeline is so severe that the FDA  lowered the bar for approval of a drug for Alzheimer's disease. That's something of a Pyrrhic victory, but lowering the bar to regulatory approval may at least keep biopharmas in the race.

As recently as March, a new blood test was designed that can predict with some accuracy whether an individual will develop Alzheimer's within three years. Having such a test available will help researchers identify candidates for treatment earlier, when the drugs being studied may be effective. At the very least, the blood test should help to spur more research.

Let's hope it does. We need a cure.