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On November 9, I had written about Targacept's (TRGT) and Astra Zeneca's (NYSE:AZN) phase III study results in MDD (major depressive disorder) with TC-5214. The surprise was that for a drug that showed much promise in phase II, the phase III results were so different and disappointing. The reasons speculated in that post were:

  1. Geographical and ethnic differences
  2. Poor study design
  3. Mechanism of action (MOA)

Of the reasons, the post suggested that item 2 was likely, and that the flexible dosing scheme adopted in the other phase III studies could show the same results. Well, the two companies just released information that a second phase III study also came up short. It is unlikely to be due to geographical factors and ethnic differences since the phase II was conducted in India and US, whereas this phase III was in the US. And the MOA hasn't changed between phase II and III.

TRGT is down about 30% to 5 and change. And Astra Zeneca is about to write off its multimillion dollar investment. This will serve as an important reminder to plan the study design properly. I'll hold judgment about the fate of TRGT - but it's management will have a high hurdle to jump to restore its credibility.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.