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Targacept Drops on Depression Drug Setback With AstraZeneca

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Dec. 20 (Bloomberg) -- Targacept Inc., developer of an experimental depression treatment with AstraZeneca Plc., plunged 36 percent after the drug failed to meet the main goal of a second trial.

Targacept fell $2.79 to $4.99 at the close of New York trading. The shares of the Winston-Salem, North Carolina-based company have dropped 81 percent this year.

The drug, TC-5214, failed in the second of four late-stage efficacy trials in patients with major depressive disorder for whom antidepressants alone didn’t work, London-based AstraZeneca said in a statement today. AstraZeneca had licensed the depression treatment from Targacept Inc. in 2009 in a deal valued at as much as $1.24 billion.

“We believe the probability of success is too low to still see a compelling risk/reward,” said Joshua Schimmer, a New York-based analyst for Leerink Swann, in a note to investors today.

AstraZeneca and Targacept said last month the compound failed to meet the main goal of its first trial, prompting Targacept shares to fall 60 percent on Nov. 8. The drug was meant to normalize certain brain receptors thought to be overstimulated in depression.

To contact the reporter on this story: Elizabeth Lopatto in New York at elopatto@bloomberg.net; Makiko Kitamura in London at mkitamura1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net.