AstraZeneca setbacks may force change in drug development
AstraZeneca, Britain’s second-biggest drugmaker, may need to change its drug development strategy after setbacks with experimental treatments for cancer and depression, analysts say.
A medicine called olaparib won’t move to the next stage of clinical trials to treat a type of ovarian cancer and a second advanced study of another drug for patients with major depressive disorder failed to meet the main goal, AstraZeneca said in statement this week. As a result, AstraZeneca will take a charge of $381.5 million in the fourth quarter.
The company needs new products as patents expire in the next four years on the heartburn drug Nexium and the antipsychotic Seroquel, which generated a combined $10.3 billion in revenue last year. AstraZeneca’s Arimidex and Casodex cancer drugs lost patent protection last year. The failures announced Tuesday means the company may need to change its strategy and pursue more development deals, said Alistair Campbell, an analyst at Berenberg Bank in London.
“AstraZeneca seems to have had more than its fair share of misfortune when it comes to the development pipeline,” analysts at Barclays Capital in London wrote in a note to investors Tuesday. “Additional development failures increase the probability that management will reassess the likely return on investment from additional R&D investment and cut costs further.”
AstraZeneca dropped 1.5 percent at the close of London trading.
The British drugmaker acquired olaparib when it bought KuDOS Pharmaceuticals in 2006 for $210 million. AstraZeneca said in January that it had shifted the focus of olaparib’s development to ovarian cancer from breast cancer.
AstraZeneca had licensed the depression treatment from Targacept in 2009 in a deal valued at as much as $1.24 billion. The companies said last month the compound failed to meet the main goal of its first trial, prompting Targacept shares to fall 60 percent in New York trading.
Targacept declined 36 percent to $4.99 in New York.
AstraZeneca will continue to investigate olaparib in other types of cancer and will pursue three more late-stage studies on TC-5214, the antidepressant, said Isabelle Jouin, a spokeswoman in London.
“We continue to believe in our focus on innovation, both homegrown and, increasingly, by accessing the best of external science through partnering, collaborations and in-licensing,” Jouin said. “In terms of acquisitions, we’ve said all along that we are not looking for scale but would consider small, bolt-on acquisitions so long as there is a good strategic fit.”
Core earnings per share for the year will probably be “in the lower half” of a $7.20 to $7.40 forecast, which remains unchanged after the research setbacks, the drugmaker said.
“It’s a setback in a pipeline that’s already relatively thin, at a company that does need pipeline products because of the patent expiries on the horizon,” Campbell said. “There are still some pipeline options, though I have to say my hopes aren’t high for many of those.”
Two drugs that show promise are fostamatinib for rheumatoid arthritis and dapagliflozin for diabetes, Campbell said. Rigel Pharmaceuticals is AstraZeneca’s partner on fostamatinib, and Bristol-Myers Squibb is its partner on the diabetes treatment. U.S. regulators in October delayed a decision on dapagliflozin by three months.
Few drugs in the late-state development pipeline look promising, with fostamatinib the only potential commercial success, Barclays’ analysts said. The company expects to file the drug for approval in the U.S. and Europe in 2013.