Lilly halts development of Alzheimer’s drug

Drugmaker Eli Lilly and Co. is stopping development of one of its potential Alzheimer's disease treatments in late-stage
patient testing.

The Indianapolis company says early results from two studies of semagacestat show the treatment did not slow the disease's
progression and was tied to some worsening clinical measures. The drug was linked with a worsening of the ability to perform
daily activities, and a higher risk of skin cancer. The halted trial will add a charge of 3 to 4 cents a share in the third
quarter, Lilly said.

Lilly still has another potential Alzheimer's treatment in late-stage testing, and the drugmaker said this decision will
not affect that drug.

Lilly will face the expiration of patents protecting several top-selling drugs in the next few years, and last week it learned
a U.S. District Court judge ruled a patent protecting the attention deficit hyperactivity drug Strattera was invalid.

The shelving of semagacestat is a setback for the drugmaker's development pipeline, which is expected to be the key driver
for the company's future success. Taking into account the patent expirations and the products currently in the pipeline,
many industry analysts expect a significant drop in revenue for Lilly over the next five years.

The shares fell 2.2 percent, or 77 cents, to $34.80 in trading before the open of the New York Stock Exchange. The company
had risen 8.7 percent in the 12 months before today.

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