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Targacept Falls After Dropping Plans to Seek Drug’s Approval

Targacept Inc. sank the most in three months after the antidepressant the company was testing with AstraZeneca Plc failed in its last two late-stage studies, ending plans to seek regulatory approval.

Targacept dropped 30 percent to $5.19 at the close of New York trading for the biggest decline since Dec. 20. The shares of the Winston-Salem, North Carolina-based company are down 79 percent in the last 12 months.

AstraZeneca and Targacept were testing the drug, known as TC-5214, as an adjunct treatment for major depressive disorder. The London-based drugmaker had licensed the treatment from Targacept in 2009 in a deal valued at as much as $1.24 billion. Targacept fell 36 percent on Dec. 20 after the two companies said TC-5214 hadn’t met its target in a late-stage trial. Today’s failures were the final of four studies on the therapy.

“This latest failure marks an end-of-road for TC-5214 program,” Robyn Karnauskas, a New York-based analyst with Deutsche Bank, wrote in a note to clients today. “We believe markets have already factored in TC-5214 failure and we see limited downside from current levels.”

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