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Latest Reasons to Avoid Alzheimer's Plays

Eli Lilly, AstraZeneca and vTv Therapeutics show why it's best to stay away from biotech's black hole.
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"No matter how good you are, you're going to lose one-third of your games. No matter how bad you are, you're going to win one-third of your games. It's the other third that makes the difference." ― Tommy Lasorda

I have started to play daily fantasy baseball on FanDuel for the first time this season. It helps provide some action when the market is closed. I have had a few top 10 finishes but largely have broken even to this point, though I am still hopeful of hitting the "big one" at some point.

Being a competitive person, I have watched more baseball in the past two months than over the past two seasons. It is the only way to sift out the average players who are on hot streaks, good players who are consistently raking it and new stud players who just got called up to The Show and are producing numbers not reflected yet in the salary cap.

One thing I have found is players who consistently are cranking out hits and power chase few balls out of the strike zone. Poor or slumping players tend to wave at anything close to the plate. "Plate discipline" matters as much as athletic ability, it seems. Yes, I am talking to you, Gary Sanchez.

I think there are some important lessons here for biotech investors. For years now, I have kept my own portfolio away from the Alzheimer's arena and have advised subscribers to do the same. This horrid disease needs to be cured or treated in the worst way but has become the black hole of biotech investing. Tens of billions of dollars have spent, and scores of potential drug candidates have gone down in flames.

Despite this, there has been little improvement in treatments. We are still not even sure about what causes this wretched ailment.

Many theories have gone down in flames, billions have been spent and both drug giants and small-caps have had little to show for their efforts to this point. This week Eli Lilly & Co. (LLY) and AstraZeneca PLC (AZN) abandoned their late-stage joint effort using a BACE inhibitor to treat Alzheimer's after spending hundreds of millions on the effort. (Eli Lilly is part of Jim Cramer's Action Alerts PLUS portfolio.) BACE inhibitors once showed some promise for treating this affliction, but initial hope has faded out. This failure follows similar ones at Merck & Co. (MRK) and Johnson & Johnson (JNJ) .

In addition, the stock of small-cap vTv Therapeutics Inc. (VTVT) is being whacked in trading this morning. The company's Phase 3 STEADFAST study assessing primary drug candidate azeliragon in people with mild Alzheimer's disease failed to achieve both primary endpoints.

These are the latest developments in a bleak picture to treat Alzheimer's. I will continue to advise to stay completely away from this disease area until substantial progress has been made. It is like chasing a 98-mph slider way out of the strike zone. You are better off taking the pitch, avoiding the strikeout and patiently waiting for something down the middle.

At the time of publication, Jensen had no positions in the stocks mentioned.