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* Lilly to partner on AstraZeneca's BACE inhibitor drug
* Astra expects first $50 mln payment in first half 2015
* Full payout of up to $500 mln dependent on drug's success
* AZD3293 seen high-risk but potential $5 bln-a-year seller (Adds further details on drug, sales forecast, background)
By Ben Hirschler
LONDON, Sept 16 (Reuters) - AstraZeneca has signed apartnership deal with U.S. rival Eli Lilly that couldearn the British company up to $500 million if a promising - butrisky - experimental Alzheimer's drug proves successful.
AstraZeneca said in May that it was looking to find apartner for its so-called BACE inhibitor drug called AZD3293,which is set to enter late-stage Phase III clinical testingagainst Alzheimer's..
The decision by Lilly to buy into the project is anendorsement of the science behind the new oral drug, given theU.S. drugmaker's long history of trying to find an effectivetreatment for the memory-robbing condition.
Lilly will pay AstraZeneca up to $500 million to sharerights to the drug, with the exact scale of payments dependingon the medicine's progress in clinical trials and its commercialsuccess.
BACE inhibitor drugs work by blocking an enzyme called betasecretase that is involved in production of beta-amyloid, aprotein that creates brain plaques considered a major cause ofAlzheimer's.
They are viewed as a promising new approach and have takencentre stage after an injectable class of medicines targetingbeta-amyloid plaque failed or fell short in trials conducted byPfizer and Lilly.
Merck & Co is currently in the lead in the BACEinhibitor field, with the first Phase III data from the U.S.company's programme likely to emerge in around 2017.
AstraZeneca said on Tuesday it expected to receive the firstpayment of $50 million from Lilly in the first half of 2015,adding the deal would have no impact on its 2014 earnings.
Most of the pipeline focus at AstraZeneca is on drugs forcancer, diabetes, respiratory and cardiovascular disease, withneuroscience projects - including Alzheimer's - no longer a corearea for the group.
$5 BILLION OR BUST?
AstraZeneca had flagged the potential of AZD3293 during itssuccessful fight against a $118 billion takeover bid by Pfizer.
A strategic defence document at the time said the BACEinhibitor could potentially sell as much as $5 billion a year,though AstraZeneca gave it only a 9 percent chance of success ona risk-adjusted basis given the high failure rate in theAlzheimer's research field.
AstraZeneca and Lilly aim to move AZD3293 rapidly into aPhase II/III clinical trial in patients with early Alzheimer'sdisease. Many experts believe that giving drugs early on couldbe the key to successful treatment.
Lilly will take the lead on clinical development of the drugunder the new partnership, while AstraZeneca will be responsiblefor manufacturing the product. The companies will be jointlyresponsible for commercialisation.
They will share equally all costs for the development andcommercialisation of AZD3293, as well as net global revenuesafter its launch.
Dementia - of which Alzheimer's disease is the most commonform - already affects 44 million people worldwide and this isset to reach 135 million by 2050, according to Alzheimer'sDisease International, a non-profit campaign group.
Unlike heart disease and cancer, no major advancements havebeen seen in Alzheimer's drug research since the first treatmentwas approved in 1993 by U.S. regulators.
Current Alzheimer's drugs, including generic forms ofPfizer's Aricept, or donepezil, can minimally and briefly helpmemory and ability to perform daily functions, but do not slowthe disease. (Reporting by Ben Hirschler; Editing by Jason Neely and MarkPotter)
