UPDATE 4-Elan, Transition drop top drug doses after deaths

Tue Dec 15, 2009 11:45am EST

* Nine deaths in patients on top doses of Alzheimer's drug

* Testing of lower dose to continue in Phase II study

* Analysts say prospects for ELND005 now uncertain

* Transition shares tumble about 50 percent (Updates with Transition share plunge and additional analyst's comment)

By Ben Hirschler

LONDON, Dec 15 (Reuters) - Elan Corp Plc ELN.I and Transition Therapeutics Inc (TTH.TO) have dropped the two highest doses of their experimental Alzheimer's drug from a mid-stage clinical trial following nine deaths.

The news raises doubts about whether the drug will now get to market, industry analysts said, and shares of Transition plummeted 48 percent to C$4.34 on the Toronto Stock Exchange on Tuesday morning.

The impact on Ireland's Elan, however, was limited as little value has so far been attributed to the product and its shares were 1.3 percent higher by 1500 GMT after earlier losing 3 percent.

Patients will be withdrawn immediately from the Phase II study of ELND005 in the two higher dose groups, 1,000 milligrams and 2,000 mg dosed twice daily. The study will continue unchanged for patients on 250 mg, the companies said.

The decision was agreed with the Independent Safety Monitoring Committee for the 353-patient trial.

"Greater rates of serious adverse events, including nine deaths, were observed among patients receiving the two highest doses. A direct relationship between ELND005 and these deaths has not been established," Elan and Transition said in a statement.

Elan and Transition, a small Toronto-based drugmaker, signed a worldwide development and commercialization agreement for the treatment in 2006.

Transition was not available for further comment.

An initial Phase I study for ELND005, an orally administered drug, had produced encouraging results, showing that high concentrations of the drug remained in brain tissue. The data also found the treatment preserved choline acetyltransferase, an enzyme in neurons that helps protect nerve cells.

But Jack Gorman, an analyst at Davy Stockbrokers, said news of the deaths in patients on high doses considerably increased the risk that the medicine will not reach market.

"At the very least efficacy at the lower dose will need to be compelling to justify development and ultimate approval," he said. "That said, we believe that little if anything is in Elan's share price today for its Alzheimer's disease pipeline."

Elan is also developing another Alzheimer's drug called bapineuzumab with Johnson & Johnson (JNJ.N), which has a different mechanism of action and is in final-stage clinical trials.

The highest dose of bapineuzumab was also dropped from testing in April because of safety concerns.

Treating Alzheimer's disease is a "holy grail" of drugmakers but developing effective new therapies for the degenerative brain disease has proved notoriously difficult.

David Dean, an analyst at Cormark Securities in Toronto, said he is taking a wait-and-see view until the U.S. Food and Drug Administration reacts to the latest news. He said one possible outcome could be that FDA might put a hold on clinical tests on the drug until all of its concerns are addressed.

"We are concerned that the proximity of the dose to the higher group will cause the FDA to closely review the situation. Doing that could result in a clinical hold," he said.

($1=$1.06 Canadian) (With files from Scott Anderson in Toronto; editing by Peter Galloway)

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