AstraZeneca counts cost of risky drug

 
Marion Dakers
DRUGS company AstraZeneca has binned its experimental infant lung disease drug following objections from US regulators, costing the firm upwards of £286m.

The company said yesterday its motavizumab drug would be discontinued, after Food and Drug Administration (FDA) advisers asked for more information on trials in June.

The costs are linked to intellectual property and ongoing research, but AstraZeneca said yesterday the sum will be excluded from core financial figures and should have no impact on earnings per share for 2010.

The news comes a week after AstraZeneca’s heart medicine Brilinta was also blocked in the US, though the drug has been approved in Europe, leading to questions about the firm’s risky strategy.

“All pharmaceutical companies are exposed to regulatory hurdles, but at least firms like GlaxoSmithKline have experience in emerging markets and in consumer products to offset some of the risk,” said Seymour Pierce analyst Mike Mitchell. “It also shows the inability of the FDA to naturally respond to the demands and requirements of drug developments.”

A spokesperson for AstraZeneca said investors are aware of the risks of a company focused on experimental drugs. “We are confident we can create value for shareholders, and are doing a lot of work around understanding the regulatory environment better,” she said.