Shares in Ireland’s Elan Corp have collapsed this morning after much-anticipated data on the investigational Alzheimer's drug bapineuzumab developed with Wyeth failed to meet expectations.

Data from a Phase II 234-patient study, which were presented at International Conference on Alzheimer's Disease in Chicago, revealed that those who do not carry the ApoE4 gene saw improvements on three of four measures of cognitive tasks as well as daily living activities. However, 12 cases of vasogenic oedema, a brain-swelling condition, were noted in patients taking AAB-001 (bapineuzumab), 10 of which occurred in those carrying the aforementioned gene.

Sid Gilman, chair of the independent safety monitoring committee for bapineuzumab, acknowledged that “this study was limited in its size, design and goals". However he added that "if the findings seen in these post-hoc analyses are replicated in the global Phase III programme (already begun by Elan and Wyeth), it would be a validation of the amyloid hypothesis and could change how physicians approach the treatment of Alzheimer's disease”.

Gary Stiles, Wyeth’s chief medical officer, claimed that the data “represent scientific validation of our decision to move rapidly into Phase III last year" where the firms “will learn much more since we will be able to study bapineuzumab in larger patient populations and better assess the results in ApoE4 carriers and non-carriers in separate trials”. He added that “we are encouraged by these results and we'll achieve greater insight as we move forward”.

These comments have failed to calm investors, however, who possibly got carried away in terms of their expectations for bapineuzumab. Such levels of expectation have certainly hurt Elan this morning as its share price was down 26.4% to 15.20 euros at 10.40 UK time.

Hunter, an analyst at Ireland’s Goodbody Stockbrokers, noted that the results “also threw up apparent anomalies in dose response” but said that “on actual drug development, however, little has changed”. In sentiment, however, “the outside hope in the market that the drug could be disease-modifying for a sub-set of patients has diminished”, he added, and the potential for bapineuzumab to come to market after an interim look at the Phase III data “has also receded for the present, pushing possible entry to the market out to 2011”.

Mr Hunter concluded by saying that the “knee-jerk reaction” from investors “is, we believe, overdone”. However, “the issue of the full data has, perhaps, seen a return to reality”.