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New Lilly drug has small sales potential

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Eli Lilly and Co.’s newest drug is a boon for Alzheimer’s research but is likely to bring the Indianapolis drugmaker less than $100 million in annual sales—at least initially, according to one of the few analysts to make a forecast.

Lilly won approval Friday from the U.S. Food and Drug Administration for Amyvid, a new imaging agent that could help physicians better diagnose Alzheimer’s disease and other forms of dementia. Amyvid binds to amyloid plaques, which are a telltale sign of Alzheimer’s disease, making them detectable using a PET scan.

Amyvid will sell at a wholesale price of $1,600 per dose, with distributors likely discounting slightly from that price. The cost of the PET scan is on top of that.

Right now, the federal agency that runs the Medicare and Medicaid programs does not reimburse for imaging agents and scans, and neither do many private health insurance plans. That will limit Lilly’s revenue initially, ISI Group analyst Mark Schoenebaum said in a weekend note to investors.

Even if health insurance start paying, there are only about 450,000 Americans diagnosed with Alzheimer’s each year. So Amyvid could at best produce total U.S. sales of $700 million.

Schoenebaum predicted that Lilly might only generate about $200 million in annual U.S. sales, because the training programs doctors must take to be able to read the Amyvid PET scans are cumbersome, in his view, which will limit the number of doctors that use the drug.

If Lilly were to win approval for Amyvid in Europe, Lilly might tack on another $300 million in annual sales, Schoenebaum predicted.

So far, most analysts who follow Lilly have yet to forecast any specific amount of sales for Amyvid. Investors shrugged at the FDA approval in Monday trading, pushing Lilly’s stock down at roughly the same rate the broader markets declined.

But where Amyvid could prove especially useful is in research for a treatment for Alzheimer’s disease. By helping doctors identify which patients have Alzheimer’s and which do not, Amyvid could help focus research efforts to the right set of patients.

Amyvid scans still will be only part of a doctor’s diagnosis, which will still rely mainly on questioning patients to assess their cognitive abilities. But the Amyvid scans can now show the presence or absence of amyloid plaque, which before could not been seen until an autopsy.

So far, no drug has been shown conclusively to slow or reverse progression of the memory-sapping disease. That’s why analysts project that the first effective treatment would be an enormous blockbuster, perhaps achieving sales of $10 billion per year.

Lilly has been trying to launch such a drug. It had one drug, called semagacestat, fail spectacularly in 2010. Another experimental drug, called solanezumab, is in a final-stage clinical trial. Other companies, such as New Jersey-based Merck & Co. Inc. and New York-based Pfizer Inc., also are trying to develop Alzheimer's treatments.

In addition to solanezumab, Lilly has another Alzhimer’s treatment in a Phase 1 clinical trial.

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