LONDON An experimental antidepressant that works by calming nicotine receptors in the brain failed to help patients in a late-stage trial, disappointing investor hopes for developers Targacept Inc and AstraZeneca Plc.
The drug, called TC-5214, has been deemed a potential big seller as the first in a new class of medicines that work by modulating neuronal nicotinic receptors. The companies have theorized that overstimulation of these receptors, or proteins, is associated with depression.
Shares of Targacept, a small U.S. drugmaker that began as part of R.J. Reynolds Tobacco Co, plunged 58 percent to $7.97 in heavy afternoon trading on the Nasdaq. Partner AstraZeneca fell 3.2 percent in London.
Data from three other Phase III trials of TC-5214 are expected by the first half of next year. Should the results prove favorable, the companies aim to seek approval for the drug in the United States in the second half of 2012 and in Europe in 2015, a spokeswoman at AstraZeneca said.
Leerink Swann analyst Seamus Fernandez, who had expected the drug to see $1 billion in sales by 2017, yanked the forecast due to the failed trial results.
"TC-5214 was the most promising pipeline candidate and possessed the strongest commercial synergies with the AstraZeneca portfolio," Fernandez said in a research note, noting it could still be approved if ongoing studies succeed.
TC-5214 is being assessed as an add-on therapy for patients who do not do well on standard antidepressants. It would compete with drugs like AstraZeneca's older Seroquel and could help the company once Seroquel faces cheaper generics.
AstraZeneca agreed in 2009 to pay as much as $1.24 billion for rights to TC-5214, including an upfront payment of $200 million. The drug has been one of the few potential bright spots in its pipeline.
Some analysts have avoided banking too much on the medicine's success. Consensus forecasts for 2016 sales stand at a modest $384 million, according to Thomson Reuters Pharma.
Savvas Neophytou of Panmure Gordon said the trial failure of TC-5214 was not a big surprise and that he remains a buyer of AstraZeneca shares, which trade at a discount of more than 26 percent to larger British rival GlaxoSmithKline Plc.
Mark Clark of Deutsche Bank said it was still possible other studies would be positive since depression trials are notoriously variable in outcome. Pfizer Inc's Pristiq was approved on the basis of only three of nine studies meeting the main goals of the trials.
But Clark, who rates AstraZeneca a "hold," is not very optimistic on TC-5214 and said the initial failure highlighted the fact that the company had limited pipeline assets to counter looming patent losses on its existing top-selling drugs.
The drug stems from lengthy research at Targacept, which has for years been using its understanding of nicotine to develop drugs for depression and other psychiatric disorders.
TC-5214 is a tweaked version of mecamylamine, a drug introduced in the 1950s to treat high blood pressure.
Researchers at the University of South Florida later began testing mecamylamine in the hope it would help children with Tourette's syndrome. It didn't, but research showed that it seemed to lessen depression in those children.
Targacept acquired a license to the drug and began developing it to treat depression. Initial test results have shown promise, but many depression drugs fail in late-stage trials, especially those that address new molecular targets.
Most new depression drugs today work by increasing the chemical serotonin, or serotonin and norepinephrine, in the brain. TC-5214 targets a different set of receptors.
(Reporting by Ben Hirschler; additional reporting by Ransdell Pierson in New York; Editing by Hans-Juergen Peters, Sophie Walker and John Wallace)