AstraZeneca hit by double blow to drug pipeline

 
City A.M. Reporter
AstraZeneca will take a $381.5 million (£24m) pre-tax charge in the fourth quarter following a double blow to its new drug pipeline, Britain's second-biggest pharmaceuticals company said.

Cancer drug olaparib will not progress into final Phase III testing for ovarian cancer due to disappointing results in a mid-stage clinical trial, while the experimental antidepressant TC-5214 failed to meet its goal in a second Phase III study.

AstraZeneca is developing TC-5214 with US biotech partner Targacept.

The double dose of bad news will further undermine confidence in AstraZeneca's ability to renew its business in the face of declining sales of existing medicines.

Its shares already trade at a discount to the European sector, reflecting investor concerns about a limited pipeline of new drugs to offset looming patent losses on blockbusters like Seroquel for schizophrenia and Nexium for heartburn and ulcers.

Despite the R&D (research and development) impairment charges – comprising $285m for olaparib and $96.5m for TC-5214, reflecting its reduced chance of success - AstraZeneca still expects to hit its target for 2011 earnings.

But it said core earnings per share, which exclude certain items, would now be in the lower half of the previously indicated range of $7.20 to $7.40.

AstraZeneca will review its plans for TC-5214 in the light of full results of remaining studies, which are expected in the first half of 2012. A potential submission for US approval is still possible for the drug in the second half of 2012, with a European filing in 2015, it said.