AstraZeneca will jointly develop and commercialize its high-risk, Phase II/III-bound Alzheimer’s disease drug candidate AZD3293 with Eli Lilly, in a deal that could net AZ up to $500 million in development and regulatory milestone payments.

AZD3293 is an oral beta secretase cleaving enzyme (BACE) inhibitor designed to prevent the formation of amyloid plaque and eventually slow the progression of Alzheimer’s. The company cites Phase I studies that showed AZD3293 significantly and dose-dependently reduced levels of amyloid beta in the cerebro-spinal fluid of Alzheimer’s patients and healthy volunteers.

Based on those promising results, AZ and Lilly said, they intend to advance AZD3293 quickly into a Phase II/III clinical trial in patients with early Alzheimer’s. Lilly will lead clinical development, working with researchers from AstraZeneca’s Innovative Medicines Unit for neuroscience, while AstraZeneca will be responsible for manufacturing. The companies said they will take joint responsibility for commercialization of AZD3293.

AstraZeneca said it expects to receive the first milestone payment of $50 million in the first half of 2015. The companies will share all future costs equally for the development and commercialization of AZD3293, as well as post-launch net global revenues.

“We believe that, by combining the scientific expertise from our two organizations and by sharing the risks and cost of late stage development, we will be able to accelerate the advancement of AZD3293 and progress a promising new approach to support the treatment of Alzheimer’s patients around the world,” Mene Pangalos, AstraZeneca’s EVP, innovative medicines and early development, said in a statement.

Developing AZD3293 carries risks and potential blockbuster rewards for AstraZeneca, the company acknowledged in documents prepared during the company’s successful fight against a £69 billion (about $111.9 billion) takeover by Pfizer.

According to AstraZeneca, AZD3293 has just a 9% chance of success in the very-risky field of Alzheimer’s drug development—where developers have long struggled to create successful new drugs. Only a handful of drug successes have ever reached the market, and even they merely slow progression of symptoms six to 12 months. A Cleveland Clinic study has found a 99.6% failure rate of clinical trials for Alzheimer's drug candidates between 2002 and 2012.

But AstraZeneca also saw rewards to developing AZD3293, estimating that the drug could generate as much as $5 billion in annual sales. AstraZeneca has struggled in recent years to reverse years of late-stage clinical setbacks involving drug candidates the company had counted on to make up for sales revenues lost or set to be lost due to the “patent cliff” expiration of several brand-name drugs.

While AstraZeneca last year downgraded Alzheimer’s and other neuroscience diseases from its list of core therapy areas in the comeback strategy launched last year by CEO Pascal Soriot, the company did say it would remain active in the space “though our investments will be more opportunity-driven.”

For Lilly, the AstraZeneca deal allows it to return to BACE inhibitor-focused Alzheimer’s drug development following its own failure in the field. Last year Lilly voluntarily terminated a Phase II study of its BACE inhibitor drug candidate LY2886721, under evaluation as a once-daily treatment for Alzheimer’s disease, after discovering “abnormal” results from liver biochemical tests.

Lilly is not the only pharma to try and miss with BACE inhibitor development; Roche scuttled its Phase I BACE inhibitor RG7129 last year. However, Merck & Co. continues to recruit patients for a Phase II/III trial of its BACE inhibitor MK-8931 launched in 2012, the company said September 5 on the page for the trial, NCT01739348.

Previous articleParion Awarded $3M from Cystic Fibrosis Foundation Therapeutics
Next articleNicox Nabs Antiviral Eye Drop Derived from Seaweed