In One Expert's View, Eli Lilly's Alzheimer Drug Trial Has A Greater Than 60% Chance Of Success

BMO recently hosted a conference call with leading Alzheimer’s disease researcher Dr. Dennis Selkoe to discuss the amyloid hypothesis and its potential implications for Eli Lilly and Co (NYSE: LLY)’s late-stage trials. According to analyst Alex Arfaei, Selkoe is cautiously optimistic about the prospects for Eli Lilly’s Solanezumab.

Selkoe believes that the future of AD treatment is likely combination therapy that involves treating a number of different drivers of the disease. While he believes that soluble AB oligomers are more harmful than plaques and should be the primary target for researchers, lowering plaques should also help lower oligimer levels as well. Plaques and oligimers typically remain in equilibrium in the brain.

Selkoe estimates a 60 percent chance of success for Solanezumab in Eli Lilly’s E3 testing. BMO is even more optimistic.

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“We estimate a ~75% probability of success because we argue that E3 is likely to amplify the ADAS-Cog14 benefit from E-1&2 given its larger, enriched sample with lower geographic variance,” Arfaei explained.

The firm is also projecting that Eli Lilly will grow its EPS and revenue annually by 16 percent and 6 percent, respectively, from 2016 to 2020.

BMO maintains an Outperform rating on Eli Lilly and a $94 rice target for the stock.