Shares of Transition Therapeutics Inc. plummeted 44.3 percent Tuesday on news that a Phase II study of Alzheimer's disease drug ELND005 will stop the two highest dosing arms following reports of adverse events, including nine deaths.

Toronto-based Transition's stock (NASDAQ:TTHI) fell $3.50 to close at $4.41. Partner Elan Corp. plc, of Dublin, Ireland, was hurt less, with its shares (NYSE:ELN) dropping only 16 cents Tuesday to close at $6.54.

A direct link has not been established between the deaths reported in the 353-patient AD201 study and ELND005, an oral, disease-modifying agent designed to work by breaking down neurotoxic fibrils to prevent the formation of amyloid plaques. But a review by an independent safety monitoring committee found a greater rate of adverse events among the two highest dose groups, prompting the companies to withdraw patients in the 1,000-mg and 2,000-mg twice-daily arms.

Study AD201 will continue unchanged for patients in the lower dose (250 mg twice daily) and placebo groups, though whether the lower dose will be as effective remains to be seen. In an earlier Phase I trial, ELND005 achieved the desired concentrations in human brain tissue and cerebrospinal fluid in eight healthy adults, but all received the 2,000-mg dose.

Elan and Transition also have opted to modify a separate open-label trial, AD251, to include only the 250-mg dose.

The companies have been working together since 2006. Transition, which had acquired the drug from Ellipsis Neurotherapeutics Inc., licensed rights to Elan in a deal worth up to $200 million. (See BioWorld Today, Sept. 28, 2006.)

This isn't the first time Elan has run into safety issues with its Alzheimer's pipeline. Last year, results from a 234-patient Phase II trial of bapineuzumab, partnered with Wyeth and Johnson & Johnson, showed that some patients developed vasogenic edema. (See BioWorld Today, July 31, 2008.)