Reality Check for Eli Lilly Fans. Baxter, Pfizer, Johnson & Johnson in Focus (JNJ, BAX, PFE, LLY)

With most eyes on Eli Lilly & Co. (NYSE:LLY) today in the wake of yesterday's (good?) news, savvy investors may want to take the opportunity to consider competitors like Baxter International Inc. (NYSE:BAX), Pfizer Inc. (NYSE:PFE), and Johnson & Johnson (NYSE:JNJ). The market his bid LLY shares up - excessively - but the fact of  the matter is, JNJ, BAX, or PFE may well have a better solution than the one Lilly is getting so much credit for right now.

At the heart of the matter is Alzheimer's disease, and the $10 billion to $20 billion that viable treatments could generate in annual sales, IF there was a decidedly-strong treatment. Current therapies don't really treat the condition - they simply address the symptoms (and not all that well in many cases). Eli Lilly & Co. shares are soaring now, up 5% yesterday and higher by 19% since late August, after the company released what was interpreted as good news about its Phase 3 Alzheimer's drug candidate solanezumab. Problem: While the market is seeing the glass as half full, the trial's results are actually half empty.

In simplest terms, the drug didn't show a significant clinical benefit. It showed some benefit at slowing down the symptoms of Alzheimer's, but most experts and observers acknowledged it wasn't enough benefit to merit the drug's approval.

Clearly the market didn't care... a real surprise, considering solanezumab is really the only item on the Eli Lilly radar that has blockbuster potential.

The irony? The attention (and dollars) being directed toward LLY are taking attention away from the likely-better Alzheimer's candidates being developed by Baxter International, Pfizer, and Johnson & Johnson.

Bapineuzumab is the joint work of Johnson & Johnson and Pfizer, along with Elan. It works at halting the effects of Alzheimer's.... sort of. The companies have realized it needs to be administered earlier in the development process of Alzheimer's, before memory loss reaches devastating proportions. More specifically, it's been shown to reduce (by 9%) the brain plaque, or amyloid, that some scientists think is the root cause of Alzheimer's disease. [Conversely, other scientists think that plaque is the body's defense against another, unknown condition.] Though bapineuzumab technically failed to meet its testing regimen's end zone, it did indicate the effort was on the right track.

How does that differ from Eli Lilly's solanezumab? It doesn't. Indeed, the two drugs are similar, so it should come as no real surprise that both failed, and that both developers are going back to the proverbial drawing boards to fix what didn't work the first time. Those 'fixes', however, could take years, as the FDA will essentially require the involved companies to start the process at the very beginning with the reformulation.

Baxter International's gammagard is taking a different approach, which right off the bat makes it the Alzheimers race frontrunner. It's an immune therapy, and while it too is ultimately targeting amyloid, it's doing so using a special form of blood-based antibodies. And, it also reduces inflammation associated with the disease. Though the drug hasn't shown a reversal of the effects of AD in afflicted patients, it's at least halted the progression of the disease.

The drug, in Phase 3 trials right now, has already been approved as a treatment for other ailments. Baster should start to wind things down for the Alzheimer's trials next year; the NDA should be filed sometime in 2014. That puts it ahead of most all the serious competition, at least in terms of time.

In the meantime, while investors may be going hog-wild for LLY right now, savvy traders may want to digest the reality that Eli Lilly shares have priced in a much-needed drug approval that's probably not going to happen.