The Indianapolis-based company has begun a second clinical study of the drug, and it is in discussions with regulators about what evidence would be needed for marketing approval. Analysts said a drug proven to slow the decline of Alzheimer’s patients would have high demand and could garner huge sales.

“These results are encouraging,” said Maria Carrillo, chief science officer of the Alzheimer’s Association, a nonprofit that funds research. “What we really need is to follow people for more time” to see if the apparent benefit holds up, she added.

Current Alzheimer’s treatments only temporarily relieve symptoms but don’t slow or halt the underlying worsening of disease, which affects about six million Americans. Lilly and other companies have been trying to find treatments that can slow, halt or even reverse the decline.

Lilly’s drug, donanemab, is an intravenous infusion that targets amyloid, a substance that forms plaques in the brain and is a prime suspect in fueling the worsening of Alzheimer’s. The drug is designed to clear amyloid.

Lilly released preliminary results of a Phase 2 study of donanemab in January.

On Saturday, the company released full results of the trial during the virtual International Conference on Alzheimer’s and Parkinson’s Diseases and published them in the New England Journal of Medicine.

The study enrolled more than 250 patients in the U.S. and Canada with early symptoms of Alzheimer’s who had evidence from imaging scans of amyloid and another substance called tau in their brains. About half received donanemab and the others received a placebo once a month for up to 72 weeks.

Researchers gave patients various tests at the start of the study to assess their cognitive and functional abilities, and then again 76 weeks after the start of treatment to detect changes. At baseline, the average score from these tests was 106 in both groups.

At 76 weeks, the scores of the patients in the placebo group dropped by an average of 10.06, while falling by 6.86 for those who took donanemab, for a 32% slowing of the decline.

Researchers said in the New England Journal of Medicine that the improvement was statistically significant but that it fell short of their goal of showing that donanemab would slow patients’ decline by 50%.

The Lilly drug appeared to slow patients’ declines using other measures in secondary analyses in the study. But the benefits in several of these secondary analyses at 76 weeks weren’t statistically significant, meaning no firm conclusions could be drawn. This included a disease-staging scale known as CDR-SB, which has been a more common measure of effectiveness in Alzheimer’s drug studies than the main measure that Lilly used in its study.

Lilly Chief Scientific Officer

Dan Skovronsky

said the results appeared to show that patients who received the drug had about the same level of cognitive skills after 18 months of treatment as the placebo recipients had after 12 months.

“We slowed the disease down by about a third,” he said. “In an 18-month study we’ve given them six months of less decline. Of course it’s a 10-year disease. The question is over 10 years could you give them back three years.”

Patients receiving donanemab experienced side effects such as amyloid-related swelling in the brain.

Write to Peter Loftus at peter.loftus@wsj.com