UPDATE 3-Myriad, Lundbeck Alzheimer's drug fails key study

(Updates with Myriad stock price, further analyst comment)

By Gelu Sulugiuc

COPENHAGEN, June 30 (Reuters) - Flurizan, an experimental drug for Alzheimer's disease, failed to help patients in a pivotal clinical test, dealing a blow to its backers Myriad Genetics (MYGN.O) and Lundbeck (LUN.CO).

Danish pharmaceutical group Lundbeck said on Monday it would take a $100 million writedown in the second quarter following the Phase III test setback, as its shares fell 11 percent.

U.S.-based Myriad said in a separate statement that it would discontinue development of the drug.

Myriad stock lost a more modest 6 percent in pre-market dealings, as investors took comfort from the fact that reduced spending would make the firm profitable earlier than expected.

Flurizan's failure to improve cognition or help patients with day-to-day activities contrasts with recent encouraging results with a rival treatment from Wyeth WYE.N and Elan (ELN.I), which proved effective for some people [ID:nL17692292].

"The data is disappointing and it means that Lundbeck has wasted half a billion Danish crowns on this project," said Jyske Bank analyst Frank Andersen.

Lundbeck bought the European rights for the Myriad drug last month for $100 million, hoping it would replace some of the revenue shortfall when blockbuster antidepressant Cipralex/Lexapro loses its patent in major markets in 2012-2014.

LUNDBECK SEEKS OTHER DEALS

Lundbeck Chief Executive Ulf Wiinberg said he would continue to search for other licensing deals within the central nervous system field. "Our pipeline is not enough to offset the 2012-2014 challenge," he told reporters. "We are looking at any deal that has scientific merit to meet patients' needs in the market."

The company's chief financial officer, Anders Gotzsche, said Lundbeck would have 4 billion Danish crowns ($847 million) of cash in hand by the end of the year, giving it considerable firepower for doing deals.

"We have enough resources to back up potential in-licensing or acquisitions we are looking into," he said.

Myriad said it would spend $8 million in the next two quarters to wrap up its Flurizan programme, but added reduced spending would make it profitable next year.

"We are disappointed that Flurizan failed to achieve significance in this study, and we will now discontinue development of this compound," Myriad President and CEO Peter Meldrum said in a statement.