AstraZeneca pays $1.24bn for antidepressant drug

Second-biggest British pharma group in deal with US biotech firm Targacept

AstraZeneca is to spend up to $1.24bn on the rights to an experimental antidepressant drug as it expands its pipeline of neuroscience treatments, the group said yesterday.

The Anglo-Swedish group has agreed a deal with US biotech company Targacept for the development of a treatment currently known as TC-5214. AstraZeneca will pay $200m in upfront fees, and $540m as the drug hits regulatory milestones before gaining a licence.

The final tranche, worth $500m to the North Carolina-based group, will be made if sales targets are hit. Targacept is also entitled to royalties on sales under the terms of the deal.

TC-5214 has already negotiated the second phase of trials, with final tests set for the middle of next year. AstraZeneca said yesterday that it hopes to get a licence to launch the drug by 2012, undertaking to pay 80 per cent of the costs associated with getting the treatment to market.

"The deal highlights AstraZeneca's long-term commitment to the depression market and if development is successful should enhance the company's franchise in this key market," said Savvas Neophytou, an analyst at Panmure Gordon. "Depression represents a significant franchise for AstraZeneca, with its depression drug Seroquel accounting for 15 per cent of [estimated] 2009 revenues. If successful this the drug will strengthen the AstraZeneca's depression franchise."

AstraZeneca, the UK's second-biggest pharmaceutical group, believes that the benefits of strengthening its presence in the market for depression drugs are potentially huge. According to the company, 42 million people worldwide suffer from Major Depressive Disorder, the type of the illness that TC-5214 is designed to treat. The worldwide antidepressant market is worth more than $20bn a year to the pharmaceutical industry.

"The opportunity to improve treatment in depression is a large one, both commercially and in terms of benefits for patients," said AstraZeneca's chief executive, David Brennan. "It's an area both AstraZeneca and Targacept know well and I'm pleased to be adding another late-stage project to our pipeline."

Like several large pharmaceutical groups, AstraZeneca is desperate to strengthen its pipeline of drugs as products that have contributed strong profits in the past face greater competition from generic drug makers. Seroquel, which also treats schizophrenia, was AstraZeneca's second-best selling treatment last year, behind Nexium, a heartburn drug.

TC-5214 is a nicotinic channel blocker that works in a different way to most antidepressants. Targacept was spun out of the research arm of RJ Reynolds Tobacco in 2000 and specialises in developing drugs that affect the brain in similar ways to tobacco products.