AstraZeneca to proceed with Targacept's Alzheimer's drug
Reposted from Winston-Salem Journal | by Richard Craver
Targacept Inc. gained a potentially pivotal vote of confidence from its top licensing pharmaceutical partner Thursday.
AstraZeneca PLC said it is proceeding with a second Targacept drug compound — AZD1446 — as a potential treatment for Alzheimer's disease.
Targacept is an anchor tenant in Piedmont Triad Research Park in downtown Winston-Salem with 150 employees. The company develops drugs based on its understanding of nicotinic receptors to treat diseases of the central nervous system. It relies on collaboration and milestone payments, primarily from AstraZeneca, to bolster its revenue.
AstraZeneca's decision to move forward comes after Targacept's most promising drug compound — TC-5214 — failed twice to achieve a meaningful difference when compared with a placebo in a Phase 3 clinical trial. There are two more clinical trials involving TC-5214 under way.
AstraZeneca is responsible for conducting and funding the development and potential commercialization of AZD1446. The next step is a Phase 2 clinical trial using the compound as an add-on treatment to donepezil in patients with mild to moderate Alzheimer's.
"AstraZeneca's decision to invest further in the development of AZD1446 reflects well on the continued promise" of Targacept's research in Alzheimer's, said Don deBethizy, president and chief executive of Targacept.
Alan Carr, an analyst with Needham & Co., a research company, said AstraZeneca's decision that AZD1446 is worth pursuing is encouraging "since it appears to be making funding decisions on a compound-by-compound basis."
"It is a vote of confidence in the breadth and depth of Targacept's research pipeline. With most of its research still in the early stages, it's not clear which could be the next leap forward for Targacept."
In October, Targacept said it is pushing forward with a second Phase 2b study for its AZD3480 drug compound for treating Alzheimer's.
Targacept retains a licensing agreement with AstraZeneca on AZD3480 that could be worth $6.2 million if certain research goals are reached with the compound. AstraZeneca already has paid Targacept $2.5 million toward the compound.
Michael Lord, an associate professor of management at Wake Forest University, said he also is encouraged by AstraZeneca's decision.
"There's such a shortage of effective therapies for Alzheimer's, and the need is so huge and growing," Lord said. "Even a modestly effective drug could do a whole lot of good, and do well in the process."
Lord said that big drug companies such as AstraZeneca have had limited success in recent years in their own drug research.
"They've spent tens of billions on their own research and development, but with less to show for it," Lord said.
"So, it's a relative risk-and-reward decision, and they need to keep making some bets. Otherwise, there won't be any new drugs in the pipeline in just a couple years."
Analysts said Targacept has little, if any, margin for more failed tests with TC-5214 given that the Food and Drug Administration has indicated two positive trial results likely would be necessary to gain its approval. Targacept still expects to file an application with the FDA for the add-on use in the second half of 2012.
The failed clinical trials have contributed significantly to a sharp decline in Targacept's share price.
Although it rose 5 cents Thursday to close at $5.67, the share price is down 70 percent since the first failed clinical trial was announced Nov. 8. It is also down 82 percent from a record high of $30.42 on March 3, 2011.