Drugmaker Eli Lilly & Co is confident it will do for Alzheimer’s patients what it did almost a century ago for diabetics - find a breakthrough treatment, even though skeptics say it could take years.

“We are on the cusp here of writing medical history again as a company, this time in Alzheimer’s disease,” Jan Lundberg, Lilly’s research chief, said in an interview.

Just as the Indianapolis-based company made history in the 1920s by producing the first insulin when type 1 diabetes was a virtual death sentence, Lundberg said he is optimistic that the drugs Lilly is currently testing could significantly slow the ultimately fatal memory-robbing disease.

“It is no longer a question of ‘if’ we will get a successful medicine for this devastating disease on the market, but when,” said Lundberg, 59.

To be sure, companies often tout drugs in the pipeline that never make it to market. Lundberg’s degree of confidence is striking given that Lilly’s most closely watched experimental drug - solanezumab - failed two big late-stage studies earlier this year. Analysts said the drug still has a slight chance of approval because it delayed memory loss in Alzheimer’s patients with mild symptoms - something no other drug has ever done.

Lilly desperately needs new big-selling medicines to replace lost sales of several of its biggest products that now face competition from cheaper generics. A successful Alzheimer’s drug could bring in billions of dollars each year.

An estimated 5 million people in the United States have Alzheimer’s, the biggest cause of dementia. More than 35 million people worldwide are believed to have dementia, including Alzheimer’s disease, and those numbers are expected to rise as more countries see lifespans increase. But truly effective treatments have eluded researchers.

“Alzheimer’s is fatal, ultimately with no survivors, so we are in desperate need for an effective therapy,” said Dr. Ronald Petersen, director of the Alzheimer’s Disease Research Center at the Mayo Clinic. “Is Lilly poised to make that contribution? I don’t know. But they are pursuing very good options.”

Petersen said Alzheimer’s may be more complex than diabetes, and thus harder to make quick strides against, as Lilly did with insulin. “There may not be a silver bullet. We’ve had so many failures of Alzheimer’s drugs, so we don’t want to be inappropriately optimistic.”

THE WAIT FOR APPROVAL

And even as Wall Street looks for an Alzheimer’s treatment that will deliver blockbuster revenues, many remain cautious.

“Lilly is one of the leaders, but this is going to take a lot longer than we all want it to,” said Cowen and Co analyst Steve Scala. “I doubt a drug will have a meaningful impact on the course of the disease for the next five years.”

Lilly also faces competition from other drugmakers like Merck & Co and Roche Holding AG that have promising Alzheimer’s compounds that could reap annual sales in the billions of dollars.

Lilly is ahead of other drugmakers in Alzheimer’s research after solanezumab, in Phase III trials, was shown in August to slow cognitive declines in patients with mild symptoms of the disease. But the drug, given by intravenous infusion, failed its overall goal of delaying cognitive and physical decline in the larger group of patients with mild-to-moderate Alzheimer’s.

Industry analysts said Lilly might ask the U.S. Food and Drug Administration to approve solanezumab only for patients with mild Alzheimer’s. But the FDA would likely require new trials for that narrower population of patients with mild disease, analysts said.

Leerink Swann analyst Seamus Fernandez said a new trial would likely take three years, but that solanezumab could generate annual sales of up to $7 billion if approved and become Lilly’s biggest source of earnings growth.

Lundberg, who joined Lilly in early 2010 after heading research for a decade at British drugmaker AstraZeneca, would not say whether Lilly would seek approval of solanezumab, based on already completed trials.

Lundberg noted that test results were mixed for solanezumab. “What we saw was a slowing of cognitive decline—the memory problem—while the activities of daily living were much less affected.”

But he said solanezumab’s results were impressive nonetheless, especially compared with a similar drug from Pfizer Inc, called bapineuzumab, that failed in large closely watched trials over the summer. Both drugs target toxic plaques in the brain made of a protein called amyloid.

“We have an agent that was safer and also showed a statistically significant benefit” against mild Alzheimer’s, he said.

A MULTI-BILLION-DOLLAR OPPORTUNITY

Some researchers believe far earlier use of solanezumab, and other drugs that target amyloid, could prevent symptoms of the disease. One such prevention study will begin next year at Washington University in St. Louis, and includes use of solanezumab.

Lundberg was cautiously optimistic about Lilly’s mid-stage trials of a different oral class of Alzheimer’s drugs called beta secretase inhibitors—or BACE inhibitors—which work by blocking production of amyloid.

In small earlier trials, Lilly’s experimental drug cut levels of amyloid beta in cerebrospinal fluid by 60 percent. A similar drug from Merck & Co lowered levels by about 90 percent in a separate Phase 1 trial. Each company claims to be ahead of the other in the potentially lucrative race to develop the first approved BACE inhibitor.

Excitement about the class of drugs intensified in July, when researchers in Iceland identified a mutation in a gene that slows the body’s production of beta secretase, Lundberg said. Those aged 85 and older with the beneficial mutation were 81 percent less likely to develop Alzheimer’s than others in that age group.

Lilly and Merck are expected to complete their mid-stage trials by early 2014, and show whether their BACE inhibitors are safe.

“This category could be enormous,” said Leerink Swann’s Fernandez, estimating that a successful drug could capture as much revenue - $10 billion - annually as some of the most successful cholesterol drugs.

“We’re looking at multi-billion opportunities because of desperation and the cost of treating this disease,” he said.

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