Eli Lilly announced Tuesday it will halt development of its experimental Alzheimer's disease drug semagacestat after preliminary results from two late-stage studies demonstrated.

"it did not slow disease progression and was associated with worsening of clinical measures of cognition and the ability to perform activities of daily living" compared with placebo.

The trials also showed that the gamma secretase inhibitor was associated "with an increased risk of skin cancer" compared with placebo, the company noted.

The two studies compared semagacestat with placebo in more than 2600 patients with mild-to-moderate Alzheimer's disease.

CEO John Lechleiter said that the drugmaker is

"clearly disappointed by the results"

 from the interim analysis, but noted that the data wouldn't affect the development of the company's other late-stage Alzheimer's disease drug, solanezumab.

because it has a different mechanism of action.

The drugmaker noted that the decision to halt development of semagacestat will lead to a third-quarter earnings charge of about $0.03 to $0.04 per share.

Commenting on the news, Jon LeCroy of Hapoalim Securities noted that the drugmaker has "had a tough time developing new drugs.

" He added that the decision to discontinue development of the drug is "clearly another blow to their weak pipeline and it increases the pressure on them to make some sort of acquisition"

in order to offset upcoming patent losses.