While the news had been widely expected, since two previous Phase III studies also missed their targets, it hit shares in Targacept hard and the stock tumbled almost 30 per cent. AstraZeneca ended up 0.2 per cent.
Britain’s second-biggest drugmaker will take an impairment charge of $50m, representing the rest of the value of TC-5214 following a partial write-down late last year.
The drug was initially deemed a potential multibillion-dollar-a-year seller as the first in a new class of medicines that work by calming neuronal nicotine receptors in the brain.
Scientists theorised that overstimulation of these receptors was associated with depression and AstraZeneca agreed to pay as much as $1.24bn for rights to TC-5214 in 2009, including an upfront payment of $200m, reflecting the high hopes for the product.
The setback leaves AstraZeneca with only one major Phase III asset that is viewed by analysts as a potential blockbuster – fostamatinib for rheumatoid arthritis.