By Ben Hirschler

LONDON, Feb 6 (Reuters) - AstraZeneca is moving an experimental Alzheimer's drug into late-stage development, taking on U.S. rival Merck & Co which announced plans to start similar final-stage research in December.

Britain's second-biggest drugmaker revealed its plan to move AZD3293 into the last phase of testing needed for registration as it announced full-year results on Thursday.

Both the AstraZeneca and Merck medicines work by blocking an enzyme called beta secretase that is involved in production of beta-amyloid, a protein that creates brain plaques considered a major cause of Alzheimer's disease.

Such oral drugs are known as BACE inhibitors and are viewed as a promising new approach to fighting the memory-robbing condition.

BACE inhibitor drugs have taken centre stage after an injectable class of medicines targeting beta-amyloid plaque failed or fell short in trials conducted by Pfizer and Eli Lilly.

Not all experts accept that reducing beta-amyloid is the key to defeating Alzheimer's, however, and the safety of the new BACE drugs has also been a subject of concern after Lilly pulled the plug on its product due to liver toxicity.

Mene Pangalos, AstraZeneca's head of innovative medicines and early development, told analysts there had been no signs of similar problems with his company's product. AZD3293 also had a clean profile in terms of potential heart problems, he added.

"We have a very potent molecule, not dissimilar to Merck's molecule," he added.

AstraZeneca is integrating Phase II and Phase III trials for its drug, which Pangalos said could either lead to a second pivotal Phase III study or, if the data was strong enough, an immediate filing for regulatory approval.

ISI analyst Mark Schoenebaum said Merck was probably some six months ahead of AstraZeneca in the BACE race, with the first Phase III data from the U.S. company's programme likely to emerge in around 2017.

Dementia - of which Alzheimer's disease is the most common form - already affects 44 million people worldwide and this is set to reach 135 million by 2050, according to Alzheimer's Disease International, a non-profit campaign group.

Unlike heart disease and cancer, no major advancements have been seen in Alzheimer's drug research since the first treatment was approved in 1993 by U.S. regulators.

Current Alzheimer's drugs, including generic forms of Pfizer's Aricept (donepezil), can minimally and briefly help memory and ability to perform daily functions, but do not slow the disease.