The drugmaker said on Monday it had started the trial to evaluate the safety and effectiveness of its so-called BACE inhibitor, named MK-8931, in patients with mild-to-moderate Alzheimer's disease.

The Phase II trial, which will compare the drug with a placebo, is a global, multi-center study that includes a group of 200 patients to test safety. The study is expected eventually to enroll up to 1,700 patients in the main Phase III trial.

Darryle Schoepp, head of neuroscience at Merck, said drugmakers have been trying for a decade to develop treatments that arrest Alzheimer's disease by blocking beta secretase, an enzyme involved in production of toxic beta amyloid proteins that form plaque in the brain believed to be a contributor to Alzheimer's disease.

By blocking beta secretase in earlier Phase I trials, the Merck drug slashed by more than 90 percent the levels of beta amyloid protein circulating in cerebrospinal fluid.

"It's like shutting the faucet so nothing comes out," Schoepp said in an interview. Merck hopes that by preventing production of beta amyloid - the main component of brain plaque - its drug will prevent a worsening of symptoms among patients with mild-to-moderate stages of the disease.

Should the Merck drug prove safe in the Phase II safety trials, Schoepp said the medicine could eventually be tested in "prodromal" patients, or those with the very earliest signs of Alzheimer's. They would include people with very mild memory problems who have also been shown by blood tests or brain scans to have worrisome initial buildup of amyloid plaque or who have other "bio markers" associated with the progressive memory-robbing disease.

A successful Alzheimer's treatment could reap billions of dollars in annual sales. But many experts believe treatment must be delivered before patients show signs of dementia because once that happens, brain damage may be irreversible.

U.S. drugmaker Eli Lilly is also testing a beta secretase inhibitor, as well as another experimental drug called solanezumab that has shown hints of effectiveness in Phase III studies. Solanezumab also targets beta amyloid protein, but through a different mechanism than beta secretase blockers.

"In addition to solanezumab, which is currently in Phase III clinical development, in July 2012 Lilly advanced our homegrown beta secretase inhibitor into Phase II clinical development for its potential to slow the progression of this devastating disease," a Lilly spokesperson said.

Schoepp noted that the Merck drug is a pill, whereas solanezumab is given by intravenous infusion. He added that solanezumab is believed to work by removing some plaque already deposited in the brain, whereas beta secretase inhibitors directly interfere with production of the beta amyloid proteins that form the plaque.

"Our drug attacks the amyloid pathway directly. We're preventing it at the beginning. You can't get plaque if you don't make these" protein fragments, he said.

EQUAL FOOTING

Lilly is considered ahead of the its rivals in Alzheimer's research after solanezumab, in Phase III trials, was shown in August to slow cognitive declines in patients with mild symptoms of the disease. However, the drug failed its overall goal of delaying cognitive and physical decline in patients with mild-to-moderate Alzheimer's.

The start of Merck's new trial of MK-8931 could put the company on an equal footing with Lilly in the race for the first approved drug to delay progress of the disease.

Merck's drug appears almost to entirely prevent the formation of new beta amyloid, the toxic proteins that lead to plaques in the brain, while the Lilly drug acts by removing existing plaques, according to Mark Schoenebaum, an analyst with ISI Group.

"We do not believe that Merck has any clinical efficacy data at this point upon which it is basing its Phase II/III 'go' decision. Thus, one must still view the Phase III as highly speculative," Schoenebaum wrote in a research note.

Assuming the U.S. Food and Drug Administration asks Lilly to conduct another confirmatory Phase III trial on its drug, the Merck drug is on roughly the same timeline to potential approval as the Lilly drug, he said.

If the FDA approves the Lilly drug on its existing data, something Schoenebaum thinks is unlikely, then Lilly would be about three years ahead, he added.

Merck shares were up 20 cents, or 0.45 percent at $44.50 in afternoon trading on the New York Stock Exchange, while Lilly shares were down 10 cents at $48.94.

Earlier this year, Roche Holding AG more than doubled the size of a clinical trial of its experimental Alzheimer's drug, gantenerumab, in patients who have early Alzheimer's but have not yet developed dementia, putting it in the vanguard of attempts to catch the disease in early stages.

(Reporting by Debra Sherman in Chicago and Ransdell Pierson in New York; editing by Gerald E. McCormick, John Wallace, Matthew Lewis and Dan Grebler)

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