Zacks_Analysts' Blog : AstraZeneca Candidate Disappoints - Analyst Blog

AstraZeneca(AZN) and Targacept, Inc. (TRGT) recently presented disappointing data on their phase III candidate, TC-5214. The companies presented top line data from the first of four RENAISSANCE phase III studies which are being conducted to evaluate the use of TC-5214 as an add on therapy to antidepressant.

The study assessed the efficacy and tolerability of the candidate in patients with major depressive disorder (MDD) who do not respond adequately to initial antidepressant treatment.

The study failed to meet its primary endpoint of change on the Montgomery-Asberg Depression Rating Scale (MADRS) after eight weeks of treatment with TC-5214 as compared to placebo. However, the candidate was found to be well tolerated and showed an adverse event profile consistent with an earlier phase IIb study.

The remaining RENAISSANCE phase III studies have completed enrolment with results expected by the first half of 2012. The company expects to file for US approval in the second half of 2012, while the EU filing is planned for 2015.

TC-5214, if successfully developed and approved, could be the first-in-class nicotinic channel modulator to serve as an adjunct treatment for MDD in patients with an inadequate response to initial antidepressant therapies.

AstraZeneca licensed the drug from Targacept in December 2009. The agreement granted AstraZeneca exclusive development and commercialization rights to TC-5214, in exchange of certain milestone and royalty payments.

Our Recommendation

We currently have a Neutral recommendation on AstraZeneca. The stock carries a Zacks #3 Rank (Hold rating) in the short run. Even though we are encouraged by the strong cardiovascular franchise at AstraZeneca and the company’s focus on the high-potential emerging markets, we remain concerned about the generic competition faced by its key products. The company is looking to lessen the impact of genericization by reducing its cost structure. Meanwhile, the weak late-stage pipeline at AstraZeneca also bothers us.