Alzheimer's disease (AD) is a fatal degenerative disease of the brain for which there is no known cure. AD causes brain cells to die. AD is thought to be caused by an excess of Beta amyloid (Aβ), a sticky protein in the brain that forms amyloid plaques. At autopsy, AD patients are required to have amyloid plaques in the brain in order to have a definitive diagnosis of AD. Inhibiting the enzyme γ-secretase inhibits the production of (Aβ) as measured in blood and spinal fluid in humans tested thus far and in blood, spinal fluid and brain in animals tested thus far. This study will use several different tests to measure the effect of LY450139 on both (Aβ)and amyloid plaques for some patients. The build up of amyloid plaques will be measured by a new brain scan that can take a picture of amyloid plaques in the brain. Other tests will attempt to measure the overall function of the brain and brain size in some patients. In this trial patients who initially receive placebo (inactive sugar pill) will at a certain point in the study be switched over to active drug, LY450139. In other words, all patients will eventually receive active drug. Each patient's participation will last approximately 2 years. Patients taking approved AD medications may participate in this study and continue taking these medications during the study. All patients who complete this study will have the option to continue receiving LY450139 by participating in an open label study.

• Drug: LY450139
  60mg orally once a day gradually escalated to 140mg orally once a day for the duration of the study
  Other Name: semagacestat
• Drug: Placebo
  Once a day for a blinded period of time

• 1: Experimental
  LY450139 60mg by mouth once a day gradually escalated to 140 mg for the duration of the study.
  Intervention: Drug: LY450139
• 2: Placebo Comparator
  Placebo by mouth once a day for a blinded period of the study.
  Intervention: Drug: Placebo

Inclusion Criteria:

• Meets criteria for mild to moderate AD with Mini-Mental State Examination score of 16 through 26 at visit 1
• Modified Hachinski Ischemia Scale score of less than or equal to 4
• Geriatric Depression Scale score of less than or equal to 6
• A magnetic resonance imaging (MRI) or computerized tomography (CT) scan in the last 2 years with no findings inconsistent with a diagnosis of AD
• If female must be without menstruation for a least 12 consecutive months or have had both ovaries removed.

Exclusion Criteria:

• Is not capable of swallowing whole oral medication
• Has serious or unstable illnesses
• Does not have a reliable caregiver
• Chronic alcohol and/or drug abuse within the past 5 years
• Has ever had a active vaccination for AD