Pfizer and Eli Lilly and Co are due to present key data on their drugs, which target the same protein, in the next two months. Expectations that either medicine would become the first real treatment for the memory-robbing disease were already very low.

Pfizer, which is developing its drug bapineuzumab with Johnson & Johnson, on Monday said it failed to improve cognition or physical function in patients with a gene variation called ApoE4 that is a major risk factor for the disease. About half of Alzheimer's patients carry the variation, which causes especially fast buildup of beta amyloid -- a protein that forms brain plaques that are hallmarks of the progressive brain disease.

"We continue to have a dim view of bapineuzumab's prospects in the current Phase III clinical program and include no sales in our model" for the product, Leerink Swann analyst Seamus Fernandez said in a research note.

Pfizer and J&J hope that better results will emerge from a separate North American late-stage trial of bapineuzumab among patients that do not carry ApoE4. Smaller trials showed improved cognition in that population. The drug makers are also proceeding with two big overseas trials in ApoE4 carriers and noncarriers.

But investors took little comfort in the drug makers' optimism, sending shares of Pfizer and J&J down 1 percent and 1.1 percent, respectively, on Tuesday. Shares of far smaller Irish drug maker Elan, which has a longstanding financial stake in bapineuzumab, tumbled 15 percent in New York.

Lilly, whose solanezumab also attacks the beta-amyloid protein believed to underpin Alzheimer's disease, fell 4.2 percent. The drug maker, whose profits have been battered by patent expirations on its top-selling drugs, badly needs new medicines to revive its performance.

TOO LATE TO HELP

An estimated 5 million people in the United States are believed to have Alzheimer's disease, the biggest cause of dementia. More than 35 million people worldwide are believed to have dementia, including Alzheimer's disease. Those numbers are expected to rise as more countries see life spans increase.

Fernandez considers the Pfizer and J&J trials involving ApoE4 noncarriers to be a "wildcard" that are more likely to fail. All of the bapineuzumab trials enrolled patients with mild to moderate symptoms of Alzheimer's, suggesting they "are too far progressed in their disease" to be helped, he said.

Results from the pair of North American bapineuzumab studies will be presented September 11 at a meeting of the European Federation of Neurological Societies in Stockholm. Pfizer is expected to issue a press release any day now unveiling main findings from the study of ApoE4 noncarriers.

Lilly aims to present data on October 8 from two late-stage trials of solanezumab at a meeting in Boston of the American Neurological Association. The Indianapolis drug maker has said it will disclose the main findings ahead of time, sometime in the third quarter.

Data from both the bapineuzumab and solanezumab trials are also slated to be presented at a meeting of the Clinical Trials Conference on Alzheimer's Disease, being held in Monte Carlo in late October, by which time most of the data will already have been combed over by other researchers and investors.

Analysts said the failure of bapineuzumab among ApoE4 carriers in the large North American study, overseen by Johnson & Johnson, did not come as a big surprise.

That's because patients with the gene variation failed to benefit from the injectable medicine in smaller Phase II studies, and also developed the same kind of worrisome brain swelling.

Cowen and Co analyst Ian Sanderson said bapineuzumab may produce hints of effectiveness in the remaining trials.

"It's highly unlikely bapineuzumab will be a complete flop because we know the drug is biologically active," Sanderson said.

But he said it is unlikely to help cognition as well as activities of daily living -- dual hurdles that must be cleared for FDA approval of Alzheimer's drugs.

(Reporting By Ransdell Pierson; Editing by Michele Gershberg and Jim Marshall)

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