Myriad Genetics and partner Lundbeck have suffered a major setback with the news that the investigational Alzheimer's disease drug Flurizan has failed in a late-stage study.

Myriad announced that results from a Phase III trial of Flurizan (tarenflurbil) in 1,684 patients with mild Alzheimer's disease did not correspond to the data observed in Phase II studies and the US firm has decided to discontinue development of the drug. As for Lundbeck, head of drug development Anders Gersel Pedersen said that "the first headline results from this trial are discouraging for patients and relatives affected by Alzheimer's disease" and make it "less likely that these initial observations could lead to an approval". He added that "we will now look further into the details of the study to evaluate whether patients in fact could benefit from the compound".

Lundbeck acquired the European rights for Flurizan last month for an initial $100 million, hoping that the drug would help the soften the blow of patent expiries on its blockbuster antidepressant Cipralex/Lexapro (escitalopram) from 2012. The news has been received badly by investors this morning and at 10.45, Lundbeck shares were down 10% to 108 Danish kroner.

Myriad chief executive Peter Meldrum noted that the firm will spend $8 million in the next two quarters to terminate its Flurizan development programme. He said the firm was disappointed, having already spent some $60 million on the drug, but "the discontinuation of Flurizan will reduce our pharmaceutical development spend substantially and should enable Myriad to achieve profitability next year".