Eli Lilly and Co. halted development of an Alzheimer’s drug after it worsened patients’ symptoms in late-stage studies, dealing a fresh blow to the U.S. drugmaker and to research to fight the disease.

The Alzheimer’s setback comes as U.S. regulators raised concerns about using Lilly’s antidepressant Cymbalta to treat chronic pain and follows patent case losses on two other key products in the last month.Shares in Lilly fell 2.4 percent on investor concerns that the company won’t be able to  stem an increasingly steep revenue decline expected in the next few years as more of its drugs lose patent protection.

“Their ongoing business is going to run into massive problems … Without a pipeline, you obviously just take that hit with no replacement of revenue,” said Hapoalim Securities analyst Jon LeCroy.

The setbacks increase pressure on Lilly to strike more deals for new drugs, but rivals also are on the hunt, he said. France’s Sanofi-Aventis is trying to buy U.S. biotech Genzyme for $18.4 billion, while other drugmakers are pursuing smaller acquisitions or licensing deals.

“Everyone is under the same pressure, so even if they’re (Lilly) more desperate than other companies, everyone is going after the same targets,” LeCroy said.

The failure for Alzheimer’s drug semagacestat eliminates one of a few treatments in late-stage development for the degenerative aging disease, which afflicts 26 million people.

Drugs such as Pfizer Inc.’s Aricept improve symptoms only marginally, and development of effective treatments has proved elusive.

The preliminary semagacestat results stem from two long-term Phase III studies. The drug was compared with placebo in more than 2,600 patients with mild to moderate Alzheimer’s.

An interim analysis showed patients on semagacestat saw a deterioration in cognition and the ability to perform daily tasks compared to those on placebo. Data also showed semagacestat was tied to a higher risk of skin cancer.

Lilly said it was encouraging trial researchers to take all patients off the medicine.

Semagacestat is a gamma secretase inhibitor designed to interfere in a key building block of beta amyloid, a toxic protein that forms sticky brain plaques in people with Alzheimer’s. It advanced to late-stage trials largely on biomarker data, such as its ability to lower levels of amyloid in cerebral spinal fluid, rather than on evidence that it was improving Alzheimer’s symptoms.

Scientists had feared that gamma secretase inhibitors might cause side effects because they interfere with a biological process called Notch signaling, needed in other cellular functions.

Lilly said the decision did not affect clinical trials of solanezumab, its other Alzheimer’s drug in Phase III study, though both experimental drugs focus on the amyloid-beta protein, they work differently.

Semagacestat’s setback follows the late-stage failure in March of a high-profile Alzheimer’s drug from Medivation Inc. and Pfizer.