AstraZeneca's Big Disappointments

Dec.21.11 | About: AstraZeneca Group (AZN)

Not exactly a load of happy holiday news from AstraZeneca (NYSE:AZN) here - it's already facing one of the nastiest patent cliffs in the industry -- second only, and arguably, to Eli Lilly (NYSE:LLY) -- and now it's had still more development compounds crash out on it.

There's olaparib, which is an inhibitor of the DNA repair pathway enzyme PARP, Poly-ADP ribose polymerase. There are a number of PARP inhibitors making their way through the clinic, but olaparib's performance can't be giving comfort to anyone else in the field. It looked promising a couple of years ago in an ovarian cancer trial, but that was only progression-free survival. As time went on, it became clear that there wasn't going to be any benefit in overall survival, and that's what the world cares about, as it should.

The compound's still in trials against other forms of cancer, and who knows, it might have better effects there. Oncology is a bettor's game if ever there was one. But ovarian cancer was the big first hope for AZ, and that's been written off.

The other compound that's hit the skids recently was TC-5214, mecamylamine, a nicotinic antagonist, which would have been a new mechanism for depression. But not if it doesn't work, and the compound missed its primary endpoint in the clinic, as I wrote about here last month. That one came in from Targacept, as olaparib came in from KuDOS, and these results have people wondering in the press about what this says about AstraZeneca's whole inlicensing strategy.

The problem is, these are two fields (cancer and depression) that have very high failure rates no matter who's doing the inlicensing. And while it's true that AZN seems to have had a lot of bad luck, some of that might just be the normal course of events if you're targeting these conditions. Having it happen while your other patents are expiring is bad, of course, but being in a position to have to depend on these therapeutic areas is a tough place to be to start with. (Not that there are a lot of safe places to work, true, but these are especially tricky). And it leads to things like this:

“AstraZeneca seems to have had more than its fair share of misfortune when it comes to the development pipeline,” analysts at Barclays Capital in London wrote in a note to investors today. “Additional development failures increase the probability that management will reassess the likely return on investment from additional R&D investment and cut costs further.”

Well, that'll really make R&D more productive.

Disclosure: None.